What Can One Expect On The Restart Of Businesses Post Lockdown?
COVID-19 (Coronavirus) is having an unprecedented and devastating impact on businesses. Travel restrictions disrupted supply chains, subdued demand and labor issues have unsettled the businesses.
It will lead to the following-
- Lesser Demand and Supply
- Employee lay-offs
- Default and/or renegotiation of contracts
- Liquidity issues thereby severely impacting cash flows
- Delays in servicing of Debt
- Working capital finance being blocked and new finance being difficult
What Are The Impacts Of This On Businesses?
Most businesses (particularly MSMEs) are vulnerable whenever normal economic activity ceases, despite governmental interventions to limit economic upset.
Several business entities would be grappling with –
- Declining profitability
- Poor/negative cash position
- Delays in receivable liquidation
- Falling DP position and blocking of working capital limit
- Difficulty in meeting term debt EMI obligation
- Increased scrutiny by lenders
How Should One Tackle This Situation?
A proper financial plan is a prerequisite in this time of crisis. As we navigate these complexities together we can assist you in preparing and executing a robust plan which will take care of your cash flows freeing your mind to concentrate on your business. We have formed a specific team of expert advisors who would devise a custom plan for your business after studying the specific challenges facing your business.
What If One Was Already Having An Overdue Emi Prior To The Lockdown?
An interesting scenario arises in case of the already stressed accounts which were overdue prior to the lockdown. The otherwise available 90 day period before being classified as NPA by the financial institution has shrunk as the lockdown has prevented the economic activity and thereby the generation of funds to honor the repayment obligations. The RBI has clarified that the lockdown period would be excluded in the calculation of 90 days period for the calculation of the NPA.
How Can InCorp Help You?
We have started a series of emails whereby regular updated information/announcements and analysis thereof along with financial implications of the lockdown & COVID-19 on the business and strategies for the mitigation of these challenges are being shared.
Further InCorp Can Assist You In Debt Management As Follows-