From Mark Mandula, Chief Marketing Officer
Has COVID-19 (coronavirus disease 2019) impacted your business? Invoice financing may help ease the cash flow strain on your business. Contact us or apply now (no cost to apply) to discuss your options.
As the sun rises today, we awaken to the reality of the financial power COVID-19 has on our financial markets in the United States. Even after a series of unprecedented financial moves by the Federal Reserve to help mitigate some of the financial fallout from the virus, all major stock indices recorded significant losses yesterday. And it appears that, absent some miracle occurring, short term prospects for the markets in the United States are not promising.
Very quickly, a recap of the facts as of the morning of March 17, 2020; a day that we find all Saint Patrick’s Day activities abandoned. The data source for this information is Johns Hopkins University accurate as of 6:30 EST and was originally published in the Wall Street Journal. Of course, these facts will change and undoubtedly increase as the pandemic progresses.
- Global death toll of 7,155, up from 6,513 yesterday
- United States death toll now stands at 68
- The shutdown of schools continues as the governors of New York, New Jersey, Connecticut tightened restrictions on the public and residents of the Bay area in California were ordered to stay at home.
I presented in the initial article of this series a McKinsey & Co., list of 7 sets we as commercial finance professionals can do to help guide our employees, partners and clients through this crisis. Here they are again summarized below;
COVID-19 Action Steps
- Protect your employees
- Set up a response team
- Look at stress, liquidity and contingency plans
- Supply Chain
- Stay close to clients
- Demonstrate purpose
The first of the immediate steps we can take is also the most important one – take care and protect the most valuable asset of any business – your employees. Employees are the lifeblood of the business, regardless of industry, location, size, or ownership. From startups to mature firms, a failure to nurture your employees in a time of uncertainty will lead to a financial failure of the business.
Each of us deal with a crisis in different manners and there is no debate that the COVID-19 crisis will be an emotionally challenging experience. Even in the short time frame since rearing its ugly head, the COVID-19 pandemic has disrupted daily life for all people. This fact has caused great uncertainty, anxiety and worry.
It is easy to dismiss this as some passing wave; but we cannot assume that “business as usual” can be a path we pursue until we are out of the woods with the current challenges. This is the time for our leaders to listen to employees and be empathetic to insure that we protect our employees, their families and our community.
A related topic that hasn’t yet surfaced is that for many employees, the COVID-19 crisis is a potentially crippling economic crisis. Even though the United States economy recently recorded strong growth in jobs created and near record low unemployment, the stark reality is that many employees in the United States cannot afford to miss a paycheck or suffer a reduction in pay. Proof of these facts were recently documented in the most recent Board of Governors of the Federal Reserve System publication entitled “Report on the Economic Well-Being of U.S. Households in 2018”, May 2019. The report describes responses to the 6th Annual Survey of Household Economics and Decision Making, and the goal of the survey is to share a wide range of financial challenges and opportunities facing individuals and households in the United States. While most measures of economic well-being and financial resilience are better than those reported in the recent past, significant areas of financial fragility and distress still remain with many in the United States. Most families have experienced gains in their overall financial health since the onset of the most recent economic expansion back in the 2009/2010 period. But even with low national unemployment, there are glaring disparities that still exist by race, education and geography in the United States today at the onset of the COVID-19 pandemic.
One might wonder why or how this is related to steps we can immediately take as leaders to successfully navigate the COVID-19 crisis. There is one simple reason: we cannot assume that our employees are immune to strain in their personal finances or are worried about the impact COVID-19 will have on their personal finances.
Do we know if their household is at risk of losing income of there was a system-wide shut down? How many of them have two or more sources of income that help make ends meet? How many arrive to the office daily living in fear of being laid off or having hours or benefits reduced? How does this impact their ability to perform and serve well? It can’t be a positive motivating factor, can it?
The Federal Reserve provides credible data on household income and can shed light on how many Americans are in a fragile economic situation. As mentioned earlier, while a large majority of individuals reported that they were doing “okay” or “living comfortably”, a sizeable number have not accrued the benefits of the 10+ year old United States expansion on a personal basis. Consider these facts from the Report:
- If faced with an unexpected expense of only $400 USD, a total of 39% of the adults surveyed would be unable to able to cover the bill with cash, savings, or a credit card paid off in the next statement.
- 12% of the adults surveyed would not be able to cover the expense at all. That’s nearly 1 in every 8 adults!
- 17% of the adults surveyed are not able to pay all of their current month’s bills in full each month. This percentage would jump to 29% if an unexpected bill of $400 occurred in a given month.
- On a long-term basis, in excess of 25% of the non-retired adults surveyed over the age of 60 had no retirement or pension savings of any kind.
These facts reinforce why the need to listen closely to the chatter and feedback from your employees as the COVID-19 crisis evolves. We should not assume that all have the ability to weather this storm without significant financial challenges.
So what practical steps and actions can we take to protect our employees? Here are some ideas proposed by the McKinsey reports and other sources I looked at as part of the research on this:
- Create a “single source of truth” about the pandemic and the headwinds faced by your business. The last thing anyone needs is to have the conversation in the office driven by half-truths, rumors, and gossip. One simple way to do this is to set up a blog or webpage internally and post important notices, updates, factual reports [for example, from the CDC/Centers for Disease Control and Prevention in the United States] for all to read and absorb.
- Provide clear policies and guidelines to all. Make no assumptions about what your employees think or know. Communicate the facts in writing and document them.
- For the very outset, make it clear to all that you will follow and adhere to the most conservative official guidelines available from credible leading global and local health authorities, like the CDC or WHO. Post on a daily basis updates, directives and mandates directly from these sources. The more facts available to all, the less “sky is falling” rumors and miscommunication will occur.
- Never stop communicating with your employees. Do it as often as you can on a practical basis.
- Support all employees with factual health guidance and advice.
- Along the way, benchmark your efforts and communicate in writing to all what you have done. It is imperative to make sure that they understand all reasonable steps are being taken to insure their health and safety simultaneously while running the business as efficiently as possible.
- A personal pet peeve of mine are meetings; and specifically “meetings for the sake of meeting” exercises. Immediately develop a low tolerance for these and build a simple operating guide that is output focused. This is the same approach that we need to nurture and utilize while the COVID-19 plague dissipates.
A final thought. Agile yet strong and enlightened leadership to manage this crisis is needed now more than ever. This is true not just in our businesses, but on a state, national and international level. Only when we acknowledge this and focus on crafting solutions that do not assign blame will we succeed in overcoming this crisis.