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News

COVID-19 highlighted weaknesses in many business continuity plans. Now is the time to reassess risk and update your plan, says Teresa Campbell.The public health restrictions introduced to control the spread of COVID-19 highlighted contingency planning weaknesses across many sectors of the economy. Consequently, businesses are currently reassessing risks and seeking new ways to mitigate against the potential disruption of local lockdowns, difficulties accessing necessary services or supplies, travel and logistics disruption and changing customer demands. The purpose of a contingency plan is for an organisation to return to its daily operations as quickly as possible with all risks outlined and actions identified to mitigate. The starting point is deciding what you want the plan to achieve. Allocate responsibility for the plan to a senior member of your team and, where possible, involve HR, communications, legal, health and safety, and operations team representatives. List out your organisation’s products and services, then examine the costs and revenue associated with each, update contact lists, identify the potential impact of disruption on employees, operations and customers, and work out what actions can be taken to protect against these risks. Make sure your contingency planning team familiarises themselves with relevant COVID-19 guidance. In the Republic of Ireland, this includes the Government’s Return to Work Safely Protocol and in Northern Ireland, the COVID-19: Working Through This Together.Where business activity temporarily ceased due to COVID-19, the complexity of the recovery process will need to be considered, with objectives for businesses likely to include:Protecting people (employees and their families, customers, suppliers): This may involve adapting workplaces to accommodate physical distancing, minimising social contact, improving cleaning and sanitisation. The plan should highlight the importance of staying away from work if employees have any symptoms. Communication will be key, and procedures should be developed for and conveyed to employees or close contacts who think they may have been exposed to COVID-19 or if they feel unwell. Finding ways to continue operating: If employees, customers, contractors, and suppliers cannot access your place of business, you must have back-up plans to remain in operation.Ensuring the business complies with health and safety legislation: This is essential to protect both your organisation and your employees.Protecting liquidity and financial stability: Monitor cashflow, optimise working capital, and avail of COVID-19 funding, grants and tax incentives (where relevant) to protect liquidity and financial stability.Prioritising remote working: Make sure that your remote working systems are in place at all times so that in the event of a COVID-19 outbreak in the area, the risk of exposure for employees can be reduced.Cross-training Train your staff so that they can cover for one another.Communicating the contingency plan: Clearly convey your contingency plan to internal and external stakeholders so that they understand how COVID-19 may affect your business and show them what they can do to help minimise the impact.Ensuring the business operates in a socially responsible manner: Act fast and don’t try to cover anything up. If there is an outbreak of COVID-19 in the area, use your contingency plan to keep your business operating while also being socially responsible. Going forward, businesses will need to continue to comply with public health restrictions, so regular monitoring of Department of Health and WHO COVID-19 updates is important. Contingency planning must become a routine part of every business operations; without one during these times, your business will fall behind. Teresa Campbell is a Director in PKF-FPM.

Aug 21, 2020
News

The last six months have been challenging for all organisations, especially those in the financial services sector. Billy O'Connell suggests four strategic actions that can help bolster those in the industry. COVID-19 has reaffirmed the need for the financial services (FS) sector to show customers what it can do for them in the most challenging of times. Many organisations have done great work in recent months, under extremely difficult circumstances, to ensure employees remain protected from infection, and customers can access much-needed services.  Before COVID-19, there was no shortage of pressure points on financial institutions, but this is a sector that has proved remarkably adept at rebounding. With the 2008 crisis in the rear-view mirror, the financial services industry was returning to near normal, just as the pandemic struck and created the 'never normal' that we find ourselves in now. I recommend the following four strategic actions that should be considered by those in the industry, not only for the short-term but for long-term success too. 1. Doubling down on digital for more accessible customer engagement   The lockdown and social distancing measures have pushed customers to use online and mobile services to manage their financial products more than ever before. This will likely drive a permanent shift in behaviour toward digital channels. Even those customers who are traditionally reluctant adaptors have had to shift to digital, leading to further focus on online propositions, at pace. Enhancement of digital channels has been a major theme in the financial services industry over the last number of years. The COVID-19 experience will only accelerate the migration to digital services over the next 12 months, requiring FS companies to become more accessible than ever, providing new products and services on digital channels, enabling flexible and live customer interactions, while also ramping-up cybersecurity and anti-fraud tools to ensure protection.  2. Working remotely, on a sustained basis   The transition to remote working was an enormous challenge over the last few months for all sectors – FS was no different. The sector needed to rapidly enable remote working processes and security measures to support staff and serve customers, while also continuing to deliver critical business and technology projects. Those who had invested in online collaboration tools and infrastructure, like Skype or Microsoft Teams were able to keep the pace on operations, business change and regulatory programmes. There will be no going back to the exact working environment seen before the pandemic and remote working practices are likely to increase, particularly for specific functions. This will require companies to look at their decision-making structures and build more fluid, multi-disciplinary teams with their partners, while giving greater autonomy to employees, built around trust and inclusivity, so they have the space to ideate and innovate rapidly.  3. Infrastructure to support agility   For both physical and IT infrastructure, agility has played an important role across the FS sector in recent months. Like a lot of businesses, financial institutions will be revisiting previous assumptions about office space and may see an opportunity to consider reducing physical infrastructure and building stock because home working has flourished. However, there will still be a need to enable face-to-face interaction and collaboration in the long-term, albeit in a physically different way. From an IT infrastructure perspective, as a sector that is in the early stages of its cloud journey, COVID-19 has shone a light on the benefits of Cloud technology.  Resilience, security and stability of critical business processes and underlying systems, speedy enablement of workforces working remotely and managing a significant increase in customer activity on digital channels – these have all been centre-stage themes over the last few months and are areas where Cloud technology can enable differentiation.   4. Analysing data for better decision making   FS companies recognise the value of the data in their systems. Trends in recent years have seen the industry using customers data to provide insights to customers on their spend, saving behaviours and needs, and to create more personalised experiences and more targeted propositions. During COVID-19, data analysis has been more important than ever – it can enable the banks to steer through the crisis, analysing at an early stage where a customer could be in, or is likely to be heading towards, financial difficulty and requires support. It’s not hard to imagine how other technologies, such as machine learning, cloud and cybersecurity will enable a new level of data analysis and will be central to plans going forward.  There are always challenges with business change and transformation, but the COVID-19 experience has demonstrated that more can be accomplished, at a quicker pace than might previously have been imagined. Being positioned to meet and accelerate through the challenges of recent months has been important for the FS sector because customers have seldom needed it more. Continued focus on change and agility is critical. Now more than ever, stakeholders are more accepting of the need for change, and investments in digital technologies will help create lasting resilience and increase service efficiency.  Although the FS industry is in the midst of a very challenging period, we are seeing real agility at play, and there is an opportunity to build on this momentum to accelerate strategic change more broadly within the sector. Billy O’Connell is Head of Financial Services in Accenture.

Aug 20, 2020
News

Are you finding it hard to switch off from work? Moira Dunne suggests fencing off pockets of time to "commute" to and from work. One of the perks of working from home is having no commute to deal with every day. We gain extra time each morning and evening and there is no traffic stress to contend with. But a daily commute does have a benefit – it helps us separate our work lives from our personal lives. A big challenge of working from home is the blurring of the lines. As we are working in the same spaces where we live, the transition from one to the other can be too sudden. Minutes after breakfast you may need to solve a challenging work problem or run a difficult online meeting. There is no time to adjust your mind; no time to get into “work mode”. The daily commute allowed time for this transition. So, here are three things you can do to gain the benefit of commuting without the associated stress. 1. Daily routine The first thing is to make sure that you have a daily routine. Start work at approximately the same time every day, whatever time that is. This especially helps on a day when motivation is low – a day when you may procrastinate and start later. The routine helps you “work yourself” into a productive mood. It also sets the boundaries for other family members in your house. 2. Commute to work Before you start work, do something to help you transition into work mode. This will be your ‘commute’ to work. It could be a quick walk around the block, an exercise routine or 10 minutes reading a business article. Find what suits you. This provides the time to park any personal thoughts and consider the work for the day. 3. Commute from work It is equally important to ‘commute home’ from work in the evening. An evening transition helps you tune out of work and be more present with family or friends. Again, identify an activity that helps you clear work thoughts from your mind. This could be planning the next day, committing to a family activity or some exercise or personal downtime. Even simply putting away your work devices can help you switch off. If you can see your technology after hours, you may be tempted to work on emails. Remember, getting some work done in the evening may be productive at the time but it can impact your ability to get things done the next day. Commute to separate work from home Being productive while working from home feels good. It also helps to reduce stress. Use these commuting tips to take control of your time so you will have more productive days. Moira Dunne is founder of beproductive.ie.

Aug 20, 2020
Management

As the pandemic continues to rage throughout the world, how are SMEs coping with maintaining their liquidity and cashflow? David Lucas explores finance options that are available to help Irish businesses thrive and persevere. The COVID-19 pandemic has uniquely impacted SMEs throughout the country. Cashflow is scant, debt is racking up, and many businesses have yet to resume trading in any meaningful capacity. Those that have recommenced have found a desolate and unfamiliar trading environment. Shops and high streets are empty, many stores remain shuttered, and dented consumer confidence looks unlikely to rebound fully until a vaccine is developed. Supports available to SMEsWithout access to the significant cash reserves available to larger enterprises, liquidity and cashflow are key concerns for many SMEs during this time. Fortunately, there are a number of supports available, and businesses should be doing all they can to avail of the Credit Guarantee Scheme, COVID-19 Working Capital Loan Scheme, Future Growth Loan Scheme, Fund, Trading Online Voucher, Local Enterprise Offices Grants and Microfinance Ireland Loans wherever possible.  Furthermore, the COVID-19 warehousing provisions, in particular, have been a very well-received benefit during this difficult period, allowing businesses to effectively warehouse their VAT or PAYE payments into an interest-free loan for 12 months and a 3% loan for the subsequent 12 months. Quick cashThese measures can provide critical relief and cash supports to businesses, but there are additional measures SMEs can take to meet liquidity needs as repayment moratoriums expire towards the end of the year. For example, businesses can optimise by selling slow-moving stock to generate cash. Debtor management sounds obvious, but assets can become tied up, and the longer debt remains unpaid the less likely it is to collect. People talk about loan-to-value and property, but at the end of the day, it is cash that repays debt.Managing debtIn this volatile business landscape, SMEs may need to renegotiate covenants, or even a complete a full restructuring of their debt. At times like these, open communication with lenders is crucial. Businesses need to be extremely well-prepared as approaching the banks can be painstaking and time-consuming, but they understand the position businesses are in – everyone wants to be able to pay down the debt and keep the business in operation. Further funding optionsFor businesses seeking to access further funding, it is crucial to know the different options that are available on the market. Alternative lenders can be less onerous in terms of covenants. They tend to lend a little bit more than the traditional banks, but they charge greater interest, often up to 6 or 7%.Invoice discounting (also known as invoice finance) has become a very popular way of lending from a working capital perspective. This is a process whereby banks or alternative lenders will lend money based on the business’ debtor book. This gives the lender increased security as there is direct access to the debtor book and no reliance on revenue or cashflow.Private equity is another potential option for SMEs in need of a capital injection. This route has become increasingly popular in recent years as these investors provide experience and growth potential as well as capital.  Many SMEs are apprehensive about selling a piece of their business, but it’s always better to own 80% of a thriving venture than 100% of a failing one.Above is a snapshot of a wide range of options for SMEs looking for ways to finance their business through this uncertain period. Not all options are suitable for every business, but a proactive approach in identifying the best available options will give SMEs with cashflow difficulties the best chance of survival.David Lucas is a Corporate Finance Partner at PKF O’Connor Leddy Holmes.

Aug 14, 2020
News

COVID-19, along with a possible hard Brexit, means a lot of uncertainty for SMEs now and going forward. Mark Degnan urges companies to act early to maximise their options to ensure their future survival.The ongoing COVID-19 pandemic, in addition to what appears to be an ever-increasing likelihood of a hard Brexit on the horizon, has created a lot of uncertainty in our economy, and while government supports have been greatly welcomed, they cannot continue indefinitely. We are seeing significant signs of market stress across multiple sectors, with retail, hospitality and leisure being the most affected areas at this time. While, unfortunately, there will be a natural increase in business failure and insolvencies in Ireland over the next 12–24 months, there are a number of alternative options and supports available to businesses when considering their future survival.Act early to maximise optionsIn order to ensure a business has the best chance of surviving such volatile times, it is key for management to act early and assess all available options and supports to them.Right now one of the biggest challenges facing businesses is the lack of liquidity and working capital available, in addition to significant reopening and operational costs and the ongoing how or when a business will reopen or ever return to profitability.While government packages have provided much-needed support in the areas of employee costs, statutory property costs, warehousing of tax liabilities and a moratorium on certain bank repayments, what might lie ahead for businesses after such supports extinguish remains uncertain.Formal restructuring processes explainedIreland has a very robust set of restructuring tools, such as Part 9 Schemes of Arrangement and Examinership, both providing a flexible and often successful outcome for many Irish businesses through our courts system. Changes to Company law (as of August 2020), will now allow companies a longer period of time in Examinership (from 100 to 150 days) to present a viable scheme of arrangement for their survival. While the changes are only temporary in nature, this is a welcome move to provide companies with an extended moratorium from its creditors, while seeking a restructure and refinance of the underlying business.Options available to businessesWhen working with clients in analysing the availability of formal restructuring processes, we strongly recommend that prior to a company seeking a formal restructure of its business through the courts, other options such as debt restructuring, sale of non-core assets/subsidiaries, equity raise and contingency planning be considered to allow the business owner to take the most appropriate steps for its survival. While many businesses will access some form of restructuring process, unfortunately, there will be businesses that will not have a reasonable prospect of survival, and in such circumstances, company directors must be aware of their duties if a company is deemed to have traded while insolvent.By actively engaging with specialised restructuring experts, supplemented by wider financial advisory teams, management and business owners will put themselves on the best footing to ensure their future survival.Mark Degnan is a Director in Deloitte’s Financial Advisory team.

Aug 14, 2020
News

Investing can be a risky business. What, then, is the best way to mitigate that risk? Oliver O’Connor provides eight helpful tips on how to give your investments the best chance of success.Investing depends a lot each individual – what risk level you are comfortable with, financial goals and your circumstances. However, if you are thinking about starting to invest, here are some eight tips to help you along.ObjectivesBefore making an investment decision, it is vital to identify what you are trying to achieve. Having objectives will give you the confidence and discipline to manage your emotions at times of uncertainty.Time horizonTime horizon (i.e. the time you expect to hold an investment) can have a significant influence on your investment decisions, as it helps to identify your ability to absorb short-term risk for the benefit of long-term returns. Generally, a shorter-term investment should be taking a below-average risk, with longer-term investments taking an above-average risk, relative to each investor.Risk toleranceWe all have different emotions and biases which influence our behaviour with money. Acknowledging how you react to investing in positive and negative environments helps to identify the types of investments which are right for you. Combining your objectives with time horizon and risk tolerance should set the base for any investment decision you make now and in the future. DiversifyDiversification of, and within, asset classes can help reduce risk and smooth investment returns. Diversification across the various asset classes is key to identifying the right level of risk for you and your investment. It’s key to note that diversification within each asset class reduces risk which is specific to an industry or region.Avoid market timingIt is impossible to tell which asset class or sector will outperform in the years ahead. Global diversification within the right mix of asset classes will allow you to benefit from investment returns whenever and wherever they occur.Manage your emotionsIt can be difficult to separate your emotions from investing. Acting on these emotions can lead to irrational decisions which damage your investment’s performance over the long term. Filter through the noiseThe constant stream of information through online platforms and 24-hour news can be overwhelming and compel investors to be reactive with their investments. It is important to remember these sources are speaking to a general audience. They are not aware of your current objectives and long-term goals, so do not let them influence either.Focus on what you can controlAs humans, we are drawn to chase returns and the next big winner. However, we have no control over the returns on offer in the future.What we can do is ensure we give our investments the best chance of success by focusing on what we can control – time, risk and behaviour. This usually requires the help of a professional, to ensure human behaviour does not adversely impact your long-term returns and objectives.Oliver O’Connor is Partner in Private Client and Wealth Management in Grant Thornton.

Aug 14, 2020