The Berenschot Navigator: business guidance during the corona crisis

The Covid-19 crisis is causing uncertainty for your organisation and your employees. Markets are in lockdown, business deals postponed, orders

cancelled. Digital networks are straining under heavy traffic and questions about teleworking. Employees are falling ill or having to care for their

children at home. The Berenschot Navigator provides guidelines to help you come through the crisis.

All organisations are facing the following challenges:

1. Keeping the business going and ensuring future-readiness

2. Maintaining liquidity and optimising costs through smart

financial management

3. Involving employees in solutions and communicating

with stakeholders

Apart from creating uncertainty, the corona crisis could be an opportunity to re-evaluate or accelerate changes

you already had in mind. When the road ahead is blocked, you must think quickly and change direction.

The new path you take might be much better than your standard route, or may reveal previously unexplored perspectives. The Berenschot Navigator acts as your guide and helps you steer your organisation through uncharted territory.

Berenschot

Keeping the business going and ensuring future-readiness

A. Customers

� Create an overview of clients that are affected. Which sectors are they in and who are their clients?

� Make clear agreements with clients and stay in contact for regular updates.

� Identify which specific revenues will be unaffected and what volumes may be lost.

� Get a clear view on the regions in which your clients operate.

� Check the terms of your contracts for failure to deliver.

� Explore what proactive measures you can take to meet clients’ wishes.

� Check how what you need to do to adjust business processes to changing customer demands.

B. Suppliers

� Create an overview of suppliers (tier 1, 2 and 3), analyse how they are affected by the crisis. Do they have a robust position in the supply chain, are their suppliers stable?

� Check with your suppliers if they can continue to guarantee volume and quality and if they have emergency measures or backup plans in place.

� Analyse which suppliers are business-critical and assess alternative suppliers.

� Assess whether you can mitigate delivery risks by selecting a more diverse group of suppliers.

� Check whether your geographical spread of suppliers is sufficient to reduce risks.

C. Processes

� Close offices when possible, arrange adequate tools to allow employees to work from home.

� Cancel all non-essential travel.

� Switch from physical meetings to online video meetings. Arrange digital alternatives for all work-related interactions.

� Introduce ‘start-of-the-day’ sessions with your team to prioritise activities and foster team spirit. Ensure every meeting has an agenda based on a Plan-Do-Check-Act cycle.

� Create smaller teams and work in alternating shifts (when possible) to minimise the risk of contamination.

� Ensure the continuity and performance of IT support.

� Create an emergency plan for multiple scenarios (for example a possible lockdown as seen in numerous countries).

m Identify the most important products or services for you and your clients.

m Determine which processes are crucial to produce and deliver these products and/or services.

m Evaluate possible risks and bottlenecks in production processes. Create mitigating measures to ensure continuation of production.

m Estimate the minimal staffing for different scenarios. Create a workforce planning taking into account permanent and flexible employees, location, plus the required team roles and competencies.

The crisis is a test of your organisation’s continuity. Is your organisation ready to deal with a large-scale crisis? Start by re-evaluating your product portfolio. Which products drive your revenue? Which products are essential to your customers right now? The crisis is affecting your customers as well. They will want to know they can rely on you.

Clear promises and commitments can help maintain strong customer relationships. What do your clients need most right now? How can you support them in their needs and offer them reassurance? For instance, could you support them with extended credit terms?

In turn, your own suppliers might be in a position to help you. Can they give guarantees on deliveries? Are they prepared to discuss their credit terms?

CHECKS:

1

Smart financial management to maintain liquidity and optimise costs

A. Customers

� Review your customers’ creditworthiness (i.e. payment terms) and identify key risks.

� Look into contractual agreements on invoicing and consequences of restricted ordering or delivery of good or services.

� Take a management team decision on which position to take, including your tone of voice. Differentiate between A-, B- and C-clients/customers and agree on delegation of authority.

� Instruct the finance and sales teams to collect outstanding payments:

m investigate options to move some revenues forward by billing in advance.

m agree which payment terms you are willing (and able) to offer clients.

m agree when services to customers will be terminated/when goods will be repossessed.

� Check whether recent shipments to customers have been billed in full.

� Examine current contractual obligations, delivery schedules and decide on actions concerning:

m which conditions need to be met before releasing shipments to customers?

m who has authority to release shipments?

� If you have a holding structure, decide how to deal with transfer pricing and deliveries.

B. Suppliers and third-party services

� Examine current obligations and create an overview of key risks.

� Take a management team decision on payment terms for suppliers (including landlords) and your attitude (tone of voice). Identify business-critical suppliers and / or shipments/deliveries (products, services, flex workers, temporary workers):

m which orders, payment and other obligations can be rescheduled, adjusted or terminated?

m who is authorised to place orders and for which amount? (with options to introduce financial limitations and an approval process).

� Check if all payment and other obligations are clearly recorded.

� Agree revised payment terms with suppliers.

� Create a team including finance and purchasing employees to deal with suppliers’ questions.

� If you have a holding structure, decide how to deal with transfer pricing and deliveries.

� Make sure that employees and suppliers know the agreements for new orders and obligations. Check if current projects/investments can be postponed.

During a crisis, it is essential to have in-depth and up-to-date insight into cashflow and the daily banking transactions. Do you have a clear view on income and expenses and how you could adjust them? A liquidity forecast model will enable you to calculate different scenarios and quickly determine suitable measures.

CHECKS:

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2 Smart financial management to maintain liquidity and optimise costs

CHECKS:

C. Employees

� Identify all monthly payments (regular salaries, bonuses and profit-linked benefits, holiday pay, salary increases, lease commitments).

� Take management team decisions on steps and actions that are needed:

m introduce a recruitment freeze.

m postpone salary increases (depending on the options in any collective labour agreements (CAO)).

m do not extend temporary contracts.

m restrict overtime.

� Manage flexible capacity options: part-time work, time in lieu/ annualised hours system.

� Oblige employees to take vacation days (to minimise financial provisions).

� Reduce leasing contracts.

� Scale down fringe benefits to a minimum (if a minimum collective labour agreement applies).

� Spread payment of holiday pay across the year (instead of a one-off payment).

� Create an overview of stakeholders (works council, unions, etc.) and involve them in deciding the steps and measures to be taken.

D. Third parties: tax authorities, banks and state aid measures

� Utilise existing and new measures available from tax authorities and banks.

m tax authorities: what is your position on settlements, adjustments and deferral options for turnover tax, wage tax and corporation tax (tax assessment and/or prepayment).

m banks: current account and borrowing facility.

� State aid measures:

m make sure you understand the current state aid measures, for example the temporary emergency bridging measure for sustained employment (NOW).

m apply for aid via measures applicable to your situation as soon as possible.

A. Leadership

� The management team should provide a clear diagnosis of the most important risks and opportunities for the organisation in the coming period.

� Take responsibility and make decisions, even when the situation is unpredictable and information incomplete.

� Give clear direction on what needs to happen. Coordinate how people cooperate and create a clear meeting structure.

� Communicate transparently and swiftly. Ensure credible internal communication messaging that stresses urgency but also expresses faith in the future.

� Invest in an effective management team, able to tackle the crisis in terms of actions (what needs to be done?) and relationships (how can we manage this together?).

� Identify all critical positions at management and other levels. Agree on replacement(s) in case of temporary absence.

� Set up a team of internal and/or external experts to ensure that the right information and expertise are available throughout the crisis.

� Lead by example.

B. Employees

� Involve employees in creating solutions for problems that may arise due to the crisis. Utilise all employees’ talents.

� Encourage initiatives, stop them if they don’t work, scale-up if they do.

� Create enough opportunities for team members to stay connected. Celebrate success along the way and organise fun time in the organisation to keep employees motivated to go the extra mile.

� Facilitate employees to work effectively in the new situation, i.e. working from home with digital tools.

C. Teams

� Create clear and purposeful goals for every team member.

� Grant team members autonomy to solve problems independently and to take ownership of their work. Give teams the tools and the time to achieve results.

� Support team members when help is needed. Invest time and energy in enabling team members to cooperate effectively when working remotely. Keep a clear focus on the health and wellbeing of individual team members.

In turbulent times it is vital to create stability and calm in your teams so that employees can continue to do their best. In times like these the creativity and input of employees are an important (and often unexpected) source of solutions. Be smart and combine several small measures with a few major interventions. Make sure that employees have the knowledge and skills they need to work in new or adapted processes.

The speed and responsiveness of the leadership can influence the impact of a crisis. The rise of social media means that their actions in crisis situations are easily magnified and shared. It is important to involve both Human Resources and Communications in the crisis management team and to ensure that lines are kept open to the works council.

CHECKS:

Involve employees in solutions and communicate effectively with stakeholders3

CHECKS:

Involve employees in solutions and communicate effectively with stakeholders3

D. Communication

� Formulate a clear narrative on the current state of the organisation and its plan for the future. Clearly state the impact of the crisis on the organisation, what this means for you and for others and how you are dealing with it. This will give employees and stakeholders a sense of direction and calm.

� Communicate to employees on the current impact of the crisis and the measures you are planning in a timely and complete manner.

� Provide clear instructions to employees. Use plain language to tell them what is expected from them and what they need to do.

� Make a personal address to employees about the implications of the crisis, preferably through a video message.

� Where possible, address concerns, questions and uncertainties, preferably by phone or by video call.

� Identify the potential impact of the current risks on how your communications function is organised.

� Think about how you communicate with employees and stakeholders (clients, customers, suppliers, works council, board of directors, trade unions, shareholders and financiers), particularly the frequency, messaging and form. Make sure that communications to all these groups are aligned.

Get started with confidence

Berenschot030 2 916 916

www.berenschot.com

The goal of the Berenschot Navigator is to offer you a helping hand during times of crisis. Would you like to discuss the situation in your organisation in more detail? You are welcome to get in touch. Apart from extensive knowledge and experience, we also offer a wide array of tools applicable to various aspects of the current crisis.

From business operations to your financial situation, to staffing issues, legal aspects or crisis communications. As always, the interests of your stakeholders – employees, clients, suppliers, banks, board of directors and shareholders - are taken into consideration. To help you look to the future with confidence.

FOR MORE INFORMATION CONTACT

Sanne van den Bosch

+31 (0)6 2093 6168s.vandenbosch@berenschot.com

Paul Pietersma

+31 (0)6 5366 3619p.pietersma@berenschot.com

Rutger Verbeet

+31 (06 5025 4235r.verbeet@berenschot.com

Joes Wigman

+31 (0)6 1300 0614j.wigman@berenschot.com