Crisis expert warns firms will need help for months to come
CONTINUING support and flexibility from Government and banks will be required by businesses for months to come as the economy moves from the distress to the recovery stage of the Covid-19 crisis, an international corporate veteran has emphasised.
Edinburgh-based consultant James Crawford – who has led organisations around the world through industry downturns and health challenges such as Ebola, Swine and Bird Flu – said cash flow will remain critical when trading frees up with the easing of restrictions.
Recovery will come in fits and starts, with the return to “normal” varying from industry to industry. This will not bring an immediate end to the need for business support measures, as the flow of income will lag behind costs such as the expense of bringing staff back on board.
“It is very easy to sit and be critical of Government actions,” Mr Crawford said. “They reacted quickly, and that was the right thing to do, even if the plans were not perfect.
“Now it is a case of the Government sitting down and saying how do we make this more sustainable in the long-term?”
His comments come amid widespread reports that many small and medium-sized business are encountering difficulties accessing loans and other emergency Government assistance that is being distributed through approved banks and lenders. Surveys have suggested that nearly one-fifth of SMES are unlikely to get access to the cash they need to survive a four-week lockdown, equating to the loss of up to one million firms. A lot of people we are talking to are finding it very difficult to access that help,” Mr Crawford said. “There are a lot of loopholes that firms can fall through.”
To keep as much cash as possible flowing through the system, he is advising business owners to get in contact with their suppliers and make arrangements for reduced or delayed payments. This will help inject a measure of stability into the otherwise extremely uncertain climate.
Every effort should also be made to ensure flexibility is retained throughout the wider supply chain.
Mr Crawford added that the rules and terms on accessing emergency financial assistance need to be clarified and applied consistently.
Mr Crawford is the co-founder and managing director of Kuro, which he helped set up last year following three decades working in the oil and gas industry. His career included 20 years with oil services giant Wood followed by a spell with exploration independent Marathon Oil, holding senior management positions within operations located in Europe, Africa, Vietnam, Bangladesh, Brunei and the Philippines.
He was with Marathon Oil in Equatorial Guinea during the 2014-16 Ebola epidemic, the most widespread outbreak of that virus in history, causing major disruption and loss of life throughout much of Western Africa.
“A lot of the things we were doing then to limit the disease to West Africa are now taking place on a global scale with coronavirus,” he said. “But other than that, it isn’t really comparable to what is going on today – nothing really is.”
Public confidence will be a major factor in the recovery from the current crisis, particularly with regard to the hospitality, tourism and travel sectors.
“The question there is, how quickly will people be prepared to start socialising again? We just don’t know at this point,” Mr Crawford said.
“This is so unprecedented – there probably isn’t anyone alive who has ever been through anything like this.”
The immediate concern of surviving the shutdown will be frustrated by the widespread furloughing of staff, with many firms currently having no one in place to process bills and invoices.
Company directors should take stock of this across their own customer base, Mr Crawford said, and adjust their risk management plans accordingly.
Now is also the time to look at taking out unnecessary overheads, which tend to grow “unintentionally” through periods of buoyant trading.
“There are still things that you can certainly be doing right now,” he concluded.
“It is going to be a challenge, but if you look at some of the innovation and resilience out there right now, it is quite amazing.
“Recessions and downturns happen, but they always come to an end.”