The recent outbreak of coronavirus has lead to widespread panic and concern throughout the world leading to economic concerns. Below are some general guidelines to follow regarding COVID-19 regarding tax and trade, financial reporting, crisis management, workforce, and supply chain.
A number of companies will already have a variety of contingency plans in affect, however, they may be unsure how to handle such a fast-acting crisis such as coronavirus. Many plans will include procedures have been put in place to continual optimal operations following typical incidents such as power outages, cyber attacks and natural disasters. However, many of these plans never thought to accommodate travel restrictions, school closures and extended quarantines.
This worldwide crisis has brought up several unique challenges. During the PcC’s first coronavirus Pulse Survey, financial leaders from Mexico and the United States gathered to share their concerns.
Crisis Management and Response
Typical issues facing the technology industry:
- The vast majority of business continuity plans will not account for the vast uncertainty of an ever-growing pandemic.
- Through the increase of event cancellations will mean less business development opportunities.
- There’ll be less business travel due to fewer client interactions. Business communication and connectivity services will become more important.
Workforce
Typical issues the technology industry may face:
- A number of staffing concerns for full-time employees in addition to delivery workers, drivers, retail staff and individual contractors.
- With a general slowdown in recruitment due to the pandemic, there can be overwhelming ramifications skilled workers.
- Likewise, there is an ever increasing chance for cyber security attacks due to more individuals working remotely.
Supply Chain and Operations
Issues that face the technology industry:
- Production begins to slow due to the disruption in the global supply chain.
- Undercapitalised companies will face major cash flow challenges and will be forced to turn to alternative sourcing as well as the potential to subsidise throughout the pandemic crisis.
- Many companies will begin to see various business solutions in an effort to address social distance and, remote work, as well as in-store alternatives, there will be a growing demand for engineering talent and developers. The need to retain top talent will be an essential element of all businesses.
- There are more than likely be a relatively high impact throughout the smart phone industry due to the labor intensive supply chain.
- The amount of disinformation throughout digital platforms will continue to grow.
- Those businesses that rely on sharing economy inventory are expected to take a major loss.
- There are several component manufacturers that rely on a handful of main suppliers.
- Several containment zones throughout the world have the possibility of triggering delivery and shipping bottlenecks.
Financial Reporting
Issues facing the technology industry:
- Workforce, supply chain distribution, and operation may face several financial reporting implications in not only current reporting periods but future as well.
- Many public companies will face increased pressure to disclose their revised guidelines which are related to the impact of COVID-19.
Taxes and Trade
Issues facing the technology industry:
- Various state and local tax issues for workers who are now forced to work remotely.
- Tax compliance issues may lag leaving newly remote employees lacking key information.
- In the short term, one might expect serious changes to income statements that will have a direct impact on forecasts.
Strategy
Issues facing the technology industry:
- With a swift and prolonged downturn in the economy, companies will be faced with various budget cuts that will cut all discretionary spending.
- Social distancing, online class, remote work will create an new demand for various products and services from the tech industry.
- There is a need for resilient and flexible new business models that have a focus on cash-flow impacts as well as the overall impact on commercial-chain and supply chain partners.
- Overall company valuations are going to be much more attractive for acquisitions lead by financially independent companies waiting for such opportunities to arise from the pandemic.
