Tips to Redesign a Business Continuity Plan That Has Everything But a Pandemic
Estimated reading time: 4 minutes, 49 seconds
Even the most thorough business continuity and risk assessment plans could not have anticipated a crisis like COVID. Workforces have suddenly gone remote; businesses are either shut or losing money; customers are churning; employees are not trained to use new tech tools; priorities are unclear; and, stress is high – sounds like a plot of a movie script.
The current crisis is definitely testing our patience and unfortunately, we’re not sure when it will end. Companies with the most sophisticated and elaborate business continuity plans are scrambling to meet the challenges and survive in an uncertain time. Whether or not you have a business continuity plan, here are some tips that will help you strategize and navigate through the current climate.
Consider looking into how you would run operations if a certain percentage of your workforce suddenly went sick or couldn’t work from home. Where would your business and finances stand if the restrictions were to get stricter or remain unchanged for the next three months? Conduct a sensitivity analysis to understand how your business would operate and adapt in different scenarios. Factors such as cybersecurity, technical gaps and supply chain disruptions should also be on the list. Create models for the worst and most-likely case scenarios. This will give you a range of outcomes that your business may consider with the resources and budget you have. Also look at which areas are seeing a direct cost escalation and how it is impacting the cash flow.
“For founder-led businesses, mitigating and managing risk in a time of crisis can be more complicated and personal. Founders typically have much more to lose and are more exposed when cash flow tightens, and capital markets shrink. Scenario planning is a valuable tool to help guide important decisions – and never more so given the current uncertainty.” – Joanne Painter, Icon Agency managing director
Identify critical finance operations
Finance and tech play a major role during any risk. Certain accounting functions should always be running in spite of a crisis, including AP, AR, audits and financial analysis. Identify these processes and ensure your team has the right technology to manage them. A tool like Beanworks AP automation can ensure accounts payable processes such as invoice approvals and payments are remotely accessible and running during this time. Now more than ever it is important to ensure your financial reports are accurate and up-to-date. Even with a slow revenue stream, expenses don’t stop. Experts suggest calling customers that owe you money so you have an understanding of whether they have the ability to pay or not, and the timing of payments. Having good financial visibility will help you band future resources and make confident business decisions.
“Beanworks AP Automation is a lifesaver during the shelter-in-place. Digitize AP is the future trend. AP is more efficient and accurate with AP automation. Invoice approval workflow is easier to monitor. We can easily view invoice history online during audit without digging thru the hard copies! [sic]” – Jenny G, Ricoh Innovations
Alternative supply chain options
When China, the world’s factory, faces disruptions, it impacts supply chains across the globe. To put this further into context, over 200 Fortune Global 500 firms have a presence directly in Wuhan, China. With everything going on, the traditional supply chain routes are either financially not viable or have been disrupted. Companies will have to analyze if they can withstand disruption for another few months with the existing supply chain. You may consider looking for alternatives like sourcing local or contacting competitors to review opportunities. You could also manage cash flow by negotiating an extension of payment delivery to the supplier. Alternative supply markets might vary greatly but countries like Mexico, India, Brazil and Chile are popular geographies for companies looking to diversify their manufacturing right now.
Reshape strategy for business continuity
Industries like hospitality and tourism are undergoing significant disruptions. Businesses that could not operate in physical spaces are finding new ways to operate. A UK kids-party company went from 200 physical kids parties a month to zero. The team switched to virtual birthday parties, playdates and live shows. Their online following has grown from 3,000 followers to over 50,000, and their online events have reached over three million people. A restaurant in Melbourne launched an online masterclass; it delivers ingredient boxes to customers and live-streams cooking class. Look at what your competitors are doing and what you can do differently with the online tools out there.
CIO Michael Archuleta says that he “believes this unprecedented pandemic puts us all in a position to be more progressive and open to learning from it.”
Communicate with stakeholders
Without a clearly defined action plan and communication strategy of your new business goals, you might leave your stakeholders confused and audience disconnected. Chalk out the communication plan keeping in mind that you will have to train the stakeholders (employees, customers, investors etc) on how to access or use the product. At a time when customers are trying to make sense of the situation, it is important to introduce new customer habits with clarity and simplicity.
“Organizations that operate with transparency and open communication have inherent advantages when events require quick actions to react and reshape.” – Christopher Mack, EY Asia-Pacific Reshaping Results and EY Japan Restructuring Leader
The not-business-as-usual attitude
With an accurate cash-flow forecasting system in place, you will be able to look at the current and upcoming expenses. What are some expenses that you can cut, trim or defer? In a not-business-as-usual approach, we want to cut down on as many non-essential expenses as possible, such as hiring. Also look at existing contracts to see if you can renegotiate payment timelines or work to extend the plan.
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