STAYING FOCUSED DURING TIMES OF UNCERTAINTY

With many states under some form of a stay-at-home restriction, the COVID-19 pandemic has undoubtedly had an impact on PEOs. Such a sharp decline in the daily workforce is unprecedented. The COVID-19 pandemic has caused businesses around the country to go from some of their most successful years to little or no revenue overnight. The level of severity may depend upon where your worksite employees are located or what industry they work in, but nobody is immune. When faced with uncertainty we must remind ourselves that we are all in this together and accept the fact that things are changing rapidly. The business plan that you have been using and has been so very successful in the past, needs to change. It’s important to remember that this pandemic is out of our control (but we can and should practice social distancing and adhere to stay-at-home restrictions). It’s easy to focus on the fear of uncertainty, but by challenging ourselves and shifting that focus to a creative response is how we will make it through this. Please know that we are here to support you. We are monitoring all new information as it relates to programs that may help you and your PEO. This is a very fluid situation and a lot of programs are being considered without the details for implementation or “how to apply” for the programs having been finalized. Here are some things to consider as you work through these uncertain times and plan for the future:

1. Prepare a contingency plan that allows the company to adjust revenue, variable costs and fixed costs under short and long-term scenarios. Reach out to customers to understand what they are planning to do and align if appropriate.
2. As this situation changes on a daily basis, it’s important to make the tough decisions now. Cash is king in the short term, understand the customers you are doing business with. For example, reconsider funding payroll for those clients that are typically a pay period or two behind. I know we all want to do the right thing by supporting our customers, but make sure you will get paid before you run payroll.
3. Prepare a 13-week cash flow, essentially cash in/cash out. Preparing a 13-week cash flow schedule will be critical in addressing every line item of revenue and expense. We have a few samples that can help, and our team can assist in preparing the schedule for you if needed.
4. Where possible, draw on available lines of credit while there is still availability. You will need cash when business starts back up as your cash outflow in the short term may exceed availability on your LOC or cash coming in. Preserve cash!
5. Stay in close contact with your financial institutions, as of now there has not been much information from the lending community as they are waiting on what the regulators will allow. Stay close and keep them updated. Most lenders will want to see a 13-week cash flow to understand how much or if they will be able to help.
6. Reach out to critical vendors now for extended terms including third party facility rent, software vendors, insurance carriers, and other vendors that can shutter the business.
7. Bottom line, some tough decisions need to be made, follow your plan and you will make it through this difficult situation.

These are a few quick suggestions to get your plan in motion. The hard part is not knowing how much damage the pandemic will bring to the economy in the longer term, but let’s stay focused on what we can control one day at time. Remember, the economic fundamentals were strong before the pandemic, we are resilient and will rebound!

Sincerely,

Your PEO team