All Canadian businesses are affected by the COVID-19 pandemic, and the primary concern is for the health and safety of employees, customers and the general public. Consequently, management must first ensure compliance with all applicable public health statutes and regulations. Management must determine whether the business is an “essential business” and make sure that it abides by any limitations the Federal or Provincial governments may have placed on its operations.
To the extent that the company’s employees come into contact with the public, management must ensure that employees have the necessary personal protective equipment to safely perform their duties. If employees must attend the company’s workplace, management must ensure that physical distancing requirements are met at all times.
Management must take steps to conserve cash resources to ensure survival through the crisis, including reducing discretionary spending, changing payment of expenses to prompt (as opposed to early) payment or perhaps extending payments, and possibly limiting debt repayments to the minimum amount payable. Management should seek advice on government pandemic relief programs to determine if the company meets eligibility requirements that may assist it in meeting near term cash flow requirements, as well as other options for conserving cash resources.
Management should review insurance policies to determine whether the company has coverage for pandemic-related losses. Care should be taken that the company is meeting all requirements under insurance policies, including security or occupation requirements. To the extent there is any uncertainty regarding pandemic coverage, or whether the company is meeting policy requirements, management should seek an appropriate coverage opinion.
The company should review its contracts with both vendors and customers to determine the existence and applicability of force majeure clauses. If such a clause applies, management should consider the extent to which the company may be temporarily or permanently relieved from contractual obligations under the agreements. Management should be equally cognizant of whether such clauses may disrupt their own operations or finances.
Finally, at all times, management must be mindful of the long term consequences its decisions including on corporate brand and reputation.
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