How could your business be affected by Coronavirus?

by Natasha Christou Digital Marketing Consultant

As the government moves the country into the delay phase of its response to the COVID-19 coronavirus outbreak, there are many knock-on effects that could cause widespread disruption across the country.

While consumers start to stockpile bread, pasta, and toiletries, businesses are faced with physical, corporate, and societal repercussions that could take years to recover from.

Concerns grew once the World Health Organization upgraded the coronavirus outbreak to a pandemic earlier this week, following the flu-like virus’ spread to more than 120 countries and seeing upwards of 132,000 cases worldwide.

Many countries across Europe followed Italy’s lead by implementing a lockdown on stores. But as a business owner in the UK, how will coronavirus impact your supply chains, finance, customers, and staffing? Have you created a plan to deal with the short- and long-term implications of the pandemic if things change or even deteriorate?

As of Thursday, 12th March, there were 596 confirmed cases in the UK, which have resulted in 10 deaths. The move to the delay stage is expected to slow the transmission of the infection after officially diagnosed cases rose five-fold in just one week.

Employees have been given reassurances for their finances with the news that they will be able to claim mandatory sick pay from the first day of a COVID-19 related illness, instead of the fourth day, which the law currently states and the government will reimburse companies who pay it.

Banks buying time for SMEs

With the stock markets gradually recovering after global shares plummeted at the start of the week, the Bank of England announced a number of measures to help businesses, such as:

An interest rate cut of 0.50% to 0.25%
Lower capital buffers on banks to support the wider economy
An expectation for banks not to increase dividends

The Royal Bank of Scotland, Lloyds, and Santander are implementing measures to assist consumers who may end up defaulting on mortgage payments, should they have to self-isolate as a result of coronavirus.

Several banks have even taken the step of reaching out to their business clients to understand how factory shortages in southeast Asia are having a knock-on effect in the UK. Where necessary, the most at-risk customers are being offered arranged overdrafts and short-term loans.

Interventions from RBS and Barclays, who each have more than one million business banking customers, are significant. Loan repayment holidays of up six months, are also among the measures being taken to support the economy.

Many businesses with Asian supply chains are currently trading off surplus stocks that were stockpiled in preparation for the Chinese New Year in January, meaning the true impact from trade delays is still to be felt.

Chancellor of the Exchequer Rishi Sunak factored in several measures to the Budget in a bid to help SMEs avoid insolvency.

Small businesses may struggle in challenging times and it may be worth considering all the options, from necessary cutbacks to ultimately controlled and voluntary liquidation if conditions deteriorate further.

A ‘time to pay’ agreement can be requested from HMRC for affected businesses, with the usual interest payments being deferred. SMEs could also benefit from £3,000 grants to help meet their business costs, with business rate discounts also supporting businesses in the leisure and hospitality sectors are being applied.

Read the small print to protect business insurance

In the UK, the coronavirus has been identified by the Government as a notifiable disease. This gives businesses further protection and the right to seek insurance compensation around any necessary cancellations.

The Department of Health and Social Care made the recommendation to protect the public from unnecessary social and economic costs.

An Association of British Insurers spokesperson said: “Commercial insurance policies provide cover against a wide range of risks, that can be tailored to the needs of individual businesses, including extensions to cover. Businesses who are concerned about the impacts of Covid-19 should check the scope of their cover and speak to their insurance adviser or broker.

“A small number of businesses may have cover in place that will specifically provide for business interruption arising from notifiable diseases. However, this type of extension is not commonly included as standard. Standard business insurance policies are designed and priced to cover standard risks and are therefore unlikely to provide cover for the effects of global pandemics like Covid-19."

Falling sales, cancellations, and staff sickness have been cited by businesses concerned by the COVID-19 outbreak as they try to navigate unchartered territory.

Earlier this week, Axa announced it would not be providing cover for COVID-19 in new policies, stating it would only cover diseases already specified in insurance contracts.

Reading the small print in your insurance policy is imperative though, with many other insurers stating they will only be liable for an outbreak if it is found on site or confirmed within 25 miles of the premises.

There are inevitable consequences for UK businesses as the epidemic gathers pace, but with the peak of the disease expected in approximately four weeks’ time, now is the time to consider how robust your business is.