Part Two
The country is now on its fourth week of coping up with Covid-19 turmoil. Business enterprises, from the smallest MSMEs to the largest conglomerates, have been addressing the risks and problems never ever before encountered in the past. Highlighted below are the more pressing concerns.
1. Employee absenteeism
With a high contagion rate and current known infected locations within key business areas of the Philippines, together with the announcement of Code Red by the DOH, employees, especially those working in high risk areas or functions (e.g., office buildings, front desk or recruitment), will likely consider the health risk of going to work in these times.
Other than absenteeism, employees engaged in higher infection risk areas (e.g., public transport, malls, etc.) might consider abandoning work to minimize contraction risks.
2. Infection event
An infection event occurs when an employee contracts the virus, confirmed or suspected, such that the workplace needs to be disinfected and employees will be home quarantined (unless otherwise required by the DOH in the future) for trace testing. In this likely event, business operations will automatically shutdown and transition into telecommuting arrangements adopted to avoid business disruptions.
Companies not prepared to shutdown and transition to prolonged telecommuting during an infection event are likely to suffer financially.
3. Commercial losses
During these periods of heightened fear of contracting the virus, many service businesses and establishment-based businesses are starting to feel the slump of consumers’ foot traffic in key commercial areas. Further, with the cancellation of most planned holidays in the Philippines, businesses that rely on tourists will have to seriously plan ahead.
4. Supply chain disruptions
Companies that depend on imported materials (e.g., raw materials or finished goods) have suffered from production delays as China has halted many manufacturing operations to minimize the contagion risks in mega factories within China. With the virus expected to last over several months, businesses with high reliance on imported products will have to manage their supply chain risks.
5. Cash flow risks
One of the biggest risks that smaller companies with unstable cash flows is to manage the limited working capital currently available matched with a fast cash burn to payoff operating expenses during these volatile times. With a looming potential to fully halt business operations, companies will have to be prepared for sustained cash outflow amid low cash inflows.
I will address in my column next week the coping mechanisms that may be employed by business enterprises in addressing these challenges.
To be continued
Filbert Tsai is a Certified Public Accountant and is the chief strategist at UpSmart Strategy Consulting Inc.
This column accepts contributions from the business community dealing on the various aspects of relevant concerns of the community. These can be e-mailed to boa.secretariat.@gmail.com.