In addressing the COVID-19 pandemic, management of US companies must ensure the safety and health of its employees as well as any other relevant individuals, while attempting reduce the economic impact on its operations. In particular, management should implement policies based on the guidelines of the Center for Disease Control (CDC) as well as regionally applicable governmental orders, such “Stay at Home” or “Shelter-in-Place” proclamations.
If a company’s operations are essential to critical industries, such as food, electricity and health care, management should ensure to communicate such a qualification to its employees and prepare written statements for governmental agencies.
Additionally, management should implement cash flow survival strategies to get the company through the COVID-19 crisis. Therefore, management should obtain actionable advice on short and long-term cash flow solutions, including payroll tax credits, R&D credits to mitigate losses, obtaining SBA disaster relief loans and minimizing banking fees.
Reviewing contractual risks such as continuing obligations to customers and vendors is critical as well. Depending on the contractual relationship, management may reduce the risk of future liabilities through a temporary release, including force majeure or hardship. Therefore, it is critically to communicate with customers and vendors to develop strategies for operations during the pandemic.
In an effort to plan for the future, management should also review current insurance policies and seek guidance from a responsible broker. Once the pandemic has been halted or defeated, various parties will likely assert claims or attempt to otherwise recover suffered damages. As a result, it is crucial to understand a company’s current protection and potential gaps to be addressed.