The start of 2020 has not been smooth sailing so far. With one weather storm after another and now the Corona Virus, perhaps being the biggest storm of them all. We are all well aware of the ongoing concern for health and the measures being put in place to contain a potential pandemic. But the effects could ripple much further and those of you running businesses may need to think smart and get ahead of things.
A huge proportion of the world’s exports come out of China and, with a lot of their workforce in lockdown, production will be struggling to meet demand. Alongside restrictions at ports, the shipping community is already feeling the pinch and with goods not reaching our shores our haulage firms are starting to suffer. Just last week an Ipswich based haulage firm closed its doors while other haulage firms have been forced to sell or rent off some of their fleet as their delivery schedules have had to be cut back.
And the situation is likely to get worse. Where firms are already suffering any hit on their operations is likely to have a huge impact, forcing redundancies and more potential closures.
Your business may not be directly connected with shipping or haulage, but you may have customers or suppliers who do have these direct links and you need to consider if something happens to those businesses how will that affect you?
Perhaps you need to stand back for a moment, look at those items in the oldest column of your debtors’ report – perhaps you need to ramp up your credit control processes to get those funds in sooner. You don’t know if that customer will be around next month or the month after.
For new, unknown customers – do you need to think about asking for funds upfront before delivering them their goods/service to minimise the risk on yourself in this uncertain market?
Transportation costs are likely to rise as transport and haulage businesses attempt to recoup their losses. As a result, your costs are likely to increase too affecting both your cashflow and your profitability.
There’s certainly a lot to think about but it’s best to think about potential issues now, while you have time rather than be on the back-foot.
