Published: Mar 9, 2020

Coronavirus Considerations: Banking and cashflow

A consequence of the Coronavirus situation is the immediate financial impact on businesses caused by things such as contracts not being fulfilled, reduced customer footfall and increased costs due to having to find alternative suppliers.  Many businesses will find their cashflows stressed for reasons completely outside of their control.  Even if a force majeure can be proved (see above) and a business has a strong contractual right to claim for damages, businesses will need to ensure that they take steps to ensure they are around long enough to bring a claim.

Along with the other steps that can be taken as mentioned in this note such as reviewing credit and other insurance policies, we would recommend the following:

  1. Speak to your lenders. If you have finance in place and there is a risk that any of your financing terms could be breached, contact your lender(s) to discuss.  You are far better served by entering into dialogue with your lenders to explain the situation and request some flexibility.  Lenders do not like to be told of issues at the last moment and be forced into making decisions
  2. Manage your cashflows.  Review all expenditure and critically assess all planned costs and identify any savings that can be made, deferring expenditure if possible
  3. Review your supply chain early to determine if supplies are likely to be affected and if so try to source alternative suppliers
  4. Review agreements with customers to establish liability if you cannot meet your obligations.  If this could happen, speak to your customers early and seek to extend delivery terms.

It is inevitable that some businesses will face severe financial difficulties, even insolvency, as a result of Coronavirus.  Every business needs to be aware of the impact on its business and to the extent that external funding is involved, it always pays to involve your lenders as early as possible to give them as long as possible to consider anything they can do to support you.

 

Key Contact

Matthew Heaton
Head of Office – Qatar, Banking & Finance
m.heaton@tamimi.com

Related Insights

back Chat with us

Disclaimer: This chat service should not be relied upon as a substitute for professional advice which takes account of your specific circumstances and any changes in the law and practice. No warranty is made as to the accuracy or completeness of the information provided via this service and no liability is accepted by Al Tamimi & Company Limited, its affiliates, partners or employees for any loss arising as a result of reliance upon the information provided.

I Agree   

Kindly accept the disclaimer to proceed to a live chat.

Please choose one of the following options below:

Thank you for your inquiry. We will connect you to one of our agents now.

Thank you. Which service are you looking for?

Thank you for your interest in working with Al Tamimi & Company. Please click here to view our latest job openings.

Please click here leave a message and we will get back to you shortly.

Chat