October 13 2020
What Can Businesses Expect From A Second Wave?
A few weeks ago, we were delighted to welcome Ehsan Haque and Daniel Morgan as guest speakers at our Virtual GC Session in collaboration with LexisNexis and Radius Law. Ehsan is the Global Head of Legal and Compliance at Hamilton Capital, and Daniel is Managing Partner at Haines Watts. The topic for the call surrounded the second wave of COVID-19 and its potential impacts on businesses. Some excellent insights were shared by the speakers, which I have summarised below.
Business Risks and Trends
A similar trend of concerns is being predicted for businesses facing a second lockdown as we saw with the first. These centre mainly around reviewing contractual obligations, force majeure clauses and dispute resolution options. With so many businesses going through their agreements with a fine-tooth comb, a rise in third party litigation funding is also being anticipated. Having worked through 2008 for comparison, Ehsan highlighted the magnitude of disruption the pandemic is causing: “Global supply chains have completely disappeared. People are looking at their situations and thinking, ordinarily I would honour the contract, but this isn’t feasible in my current situation.”
Culturally, Ehsan says Hamilton Capital is lucky because its teams are going into the office five days a week. This allows for high levels of interaction and collaboration, and for any new starters to become integrated quickly. However, with a second lockdown looming, this team dynamic looks soon to revert back to remote working. With this comes issues that many workers are now fully aware of: missing out on informal catch-ups with colleagues, difficulty compart-mentalising work time and personal time, and mental well-being. For tips on how to manage these issues as a manager, click here.
A Financial Perspective
Daniel has worked closely with clients to forecast and strategise for various outcomes and pressures resulting from the pandemic. At the beginning of lockdown, this took the form of motivating clients and convincing them that there was light at the end of the tunnel. Moving forward, Daniel then worked with clients to produce tiered cash-flow forecasts: good, reasonable and worst case. With lockdown lifting in the summer, this led to some companies relaxing and taking a more positive outlook on their situations. However, Daniel suggests this is pivoting rapidly as new measures are announced by the government, and clients are looking to manage their risks more closely: “Building a cash reserve is really key. The concern is if there isn’t government support again, there could be a struggle for businesses getting that cash in from clients and customers.”
On a more positive note, the rapid adaptation of businesses to the first lockdown cannot be overlooked. In the hospitality sector, pubs and restaurants quickly implemented takeaway services. Retailers switched to online sales, and remote working was accepted as the new normal without too many issues. As Daniel states: “During the first lockdown, companies were very resilient in coming up with new revenue streams. A lot of businesses will be far better prepared for the second spike and will have processes in place to mitigate the impact as much as possible.”