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What Businesses Can Do To Stay Resilient During COVID-19

With the COVID-19 pandemic affecting the economy worldwide, Singaporeu2019s GDP growth is currently at the weakest since the 2008 financial crisis.<br><br>Check out what businesses can do to stay resilient during COVID-19 at www.incorp.asia.

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What Businesses Can Do To Stay Resilient During COVID-19

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  1. WHAT BUSINESSES CAN DO TO STAY RESILIENT DURING COVID-19 Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Connect with us for the latest business updates: Last updated Feb 2020 | 1 Twitter LinkedIn Facebook

  2. Singapore Budget 2020 Helping viable businesses overcome immediate challenges, save jobs and protect livelihoods. 1234 5678 1234 5678 Cost Cash Credit Total of S$59.9 + S$3.8 (S$63.7) billion support packages Overall FY2020 deficit budget of S$43.3 + S$3.8 (S$47.1) billion DPM Heng delivered several packages via: ƒ Unity Budget (on18 February 2020): www.incorp.asia/blog/budget-2020-what-you-need-to-know/ ƒ Resilience Budget (on 26 March 2020): www.incorp.asia/blog/supplementary-budget-to-help-singapore-curb-covid-19/ ƒ Solidarity Budget (on 6 April 2020 & 21 April 2020) : www.incorp.asia/blog/solidarity-budget-for-businesses-and-workers/ Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 2

  3. Singapore Budget 2020 Pointers on some of budget packages for Companies Auto Inclusive Assistance Schemes*: Job Support Schemes (JSS) for every local worker in employment ƒ ƒ subsidy of 75% of wages for April & May 2020 on the first S$4,600 of gross monthly pay subsidy of 25% to 75% on the first S$4,600 gross monthly wages for a further seven months depending on the industry sector pay-outs will be April 2020, May 2020, July 2020 and October 2020 include employees of a company who are also shareholders and directors of the company with assessable income of $100,000 or less for Year of Assessment 2019 ƒ ƒ Foreign Workers’ Levy (FWL) ƒ ƒ * except for employers specifically excluded in the Employer Exclusion List as found in the below link: waiver of FWL due in April and May 2020 FWL rebates of $750 per month for each work permit and S pass holder in April 2020 and May 2020 www.iras.gov.sg/irashome/Schemes/Businesses/Jobs-Support-Scheme--JSS-/#title9 Other Potential Cost Savings: Property Tax Rebates ƒ 30% to 100% rebates for 2020 depending on the type of properties. By 31 May 2020, all property owners would have received their rebate notices. Part 6 of the COVID19 (Temporary Measures) Bills – transfer of the benefits of the properties tax rebates to tenant https://sso.agc.gov.sg/Bills-Supp/19-2020/Published/20200407?DocDate=20200407#pr29- ƒ Rental Waivers on Government Properties ƒ one to three months of rent waiver Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 3

  4. Singapore Budget 2020 A number of financing schemes managed by Enterprise Singapore: In particularly ƒ ƒ ƒ Temporary Bridging Loan Programme (TBLP) Enterprise Financing Scheme - SME Trade Loan (SME TL) Enterprise Financing Scheme - SME Working Capital Loan (SME WCL) Government’s risk share 90% for loans initiated from 8 April 2020 till 31 March 2021 MAS providing funding at almost zero cost to eligible financial institutions Each of these schemes has specific criteria to meet but all schemes require companies to be registered and physically present in Singapore and has at least 30% local equity held directly or indirectly by Singaporeans and/or Singapore Permanent Residents, determined by the ultimate individual ownerships. There are a number of other financing schemes, the below link provides details: https://www.enterprisesg.gov.sg/financial-assistance/loans-and-insurance Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 4

  5. Singapore Budget 2020 Assistance schemes for expanding out of Singapore: Market Readiness Assistance Grant (MRA) ƒ up to 70% of eligible costs, capped at $100,000 per company per new market from 1 April 2020 to 31 March 2023 to cover overseas market promotions, business development and market setup costs; and each application is limited to one activity in a single oversea market (eg. trade fair) ƒ Enterprise Development Grant (EDG) ƒ ƒ objective is to help Singapore companies grow and transform; grants support projects undertaken by companies (a) core capabilities, strengthening business foundations for growth; (b) innovation and productivity, exploring new areas of growth and redesigning workflow and processes to enhance efficiency; and (c) market access, venturing overseas International Co-Innovation Programme ƒ for cross-border collaboration projects on technology development and co-innovation Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 5

  6. Financial & Operational Resiliency – EP It is crucial that you ensure viability and sustainability of your business during this period. Financial Health and Viability Forward Thinking Strategies Crisis Management Business Adaptability Plan Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 6

  7. Financial & Operational Resiliency – EP Step 1: Financial modeling - current market condition ƒ Irrespective of where your company is incorporated or where the operations are conducted, you must first understand your financial position today. It is therefore crucial you get your finance personnel involved. ƒ Perform a profit & loss projections till end of financial year and the next financial year, taking into consideration the following: Š segmentation by products or geographical areas; Š segregate direct variable and direct fixed costs; Š sales contracts secured / loss in revenue due to Covid19; Š additional expenses to cope with current situation; Š consider government support schemes (for Singapore companies - JSS, FWL grants, property tax rebates and rent waivers from the Singapore government); and Š any other assistance schemes from government and government agencies which are eligible for the entity ƒ Work out your expected cash flow requirements for the same period, taking into account the changes caused by Covid19: Š possible delays of receipts (or non-payments) from debtors; Š maximise credit terms from suppliers; Š stock requirements; Š deferment of tax payments for three months; and Š deferment of contractual payments - COVID19 (Temporary Measures) Bill ƒ Arrive at your projected financial positions for both current financial year-end and next financial year-end. Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 7

  8. Financial & Operational Resiliency – EP Step 2: Determine and Review KPIs The following are KPIs and areas for focus: Š sales and gross profit margin by business segment: revenue declined? gross profit margin after direct variable costs? breakeven point? Š operating expenses: review top three cost drivers for possible reduction? Š cash flow: how long can the current cash balance last? current and quick ratio, ability to meet immediate cash demands? cash breakeven point? Š cash conversion days: review stock level, debtors and creditors turnover days; ways to improve cash conversion days? Š gearing ratios: long term debt to equity ratio and current debt to equity ratio; possibility to restructure existing debts? Step 3: Scenario/Sensitivity Analysis Companies must address the possibilities of prolonged and or further downturn: Revenue - 1% Cost of Sales 1% + Staff Cost 1% + Other operating expenses 1% + Days sales outstanding 1 + Days payable outstanding 1 MINUS Days sales of inventory 1 + Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 8

  9. Financial & Operational Resiliency – EP Step 4: Possible actions For each business entity, to consider the possibilities of the following: Š alignment of resources/capacity to more lucrative segment of your business; digitalisation (social media engagement) to reach out to customers? collaborations with other businesses to drive sales? Š cost controls measures other than salary reduction; process reengineering (productivity improvements); possibility of converting fixed costs to variable costs; cloud-based solutions? Š improvement in inventory management and credit management, step-up collections; possibility to enforce advance payment; drag payments? Š restructure existing debt to defer repayments Group companies to consider the possibilities of the following: Š relocation of production or certain functions within group companies; Š cashflow support within group companies via intercompany borrowings; Š dividend payments upwards to holding company; Š loans - what works best for holding company and each subsidiary companies; and Š fund raising through capital injection (M&A) Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 9

  10. Financial & Operational Resiliency – EP Loans Before deciding on the loan to apply, company to consider further: Type of loan Š short-term loan, fast cash but possibly higher interest rate and repayment more intense; Š fixed assets loan, longer term but collateral based; and Š Invoicing financing, cash advance against receivables and improve cashflow immediate Source Š possibility to tap on the credit schemes supported by the Singapore Government; Š for group companies, source of funds at lowest interest rates Level of funding Š beware of over borrowing; Š conduct self-check to avoid over-reliance on external financing Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 10

  11. Financial & Operational Resiliency – EP Points to note of Financing Schemes in Singapore Certain essential requirements from financiers: Š personal guarantee from all directors with more than 5% shareholdings; Š corporate guarantee from parent company holding more than 50% shareholdings; Š financial statements not older than 18 months; Š liquidity - minimum current ratio of 1.0; Š minimum EBITDA/interest of 1 time; Š profitable for last 1 to 3 years; and Š high level financial projections for 3 years for TBLP Further Signs to look out for Š negative/declining gross profit margin: viability of business model? Need to scale-down or suspend operations of certain business segment? Š negative net working capital: immediate cashflow needed if business is viable Š high gearing ratio: external financing will be a challenge, mergers & acquisitions may be the right way to go if there is a good business model Š net liability position: risk of insolvent trading Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 11

  12. Service Portfolio • Offshore Company Incorporation • License Application • Company Formation Services • International Patents • Trademark Registration INCORPORATION • Corporate Secretarial Services for Private companies • Corporate Secretarial Services for Listed companies (SG and HK) • Nominee Services SECRETARIAL & COMPLIANCE • Regulatory and Statutory compliance • Initial Public Offering • Shareholder communications • General meetings (AGM/EGM/SGM) • Maintenance of Registers for listed companies • Corporate Actions SHARE REGISTRY • Routine Accounting • Complex Accounting Assignments • Payroll Services • Business Support (Admin) • Financial Statement Preparation • XBRL conversion • Scrutineering & Polling Agent • HR Solutions and Recruitment OUTSOURCING • Tax Planning and Structuring • Tax Audit and Investigation • Transfer Pricing Advisory • Tax Filing and Advisory • Tax Dispute Resolution TAXATION • Immigration Advisory • Employment Pass Application / Renewals / Cancellations / Appeals IMMIGRATION • Financial Modelling • FRS Advisory • Valuation of Business • Financial Due Diligence • Tax Due Diligence • M&A Advisory BUSINESS ADVISORY • Internal Audit • Risk Management • Governance Advisory • Sustainability Reporting RISK ASSURANCE • Liquidation • Lender Services • Corporate Restructuring • Forensic Investigations • Litigation Support • Judicial Management • Trustees/Nominees in Bankruptcy CORPORATE RECOVERY Questions & Answer Clarifications of Fuzzy Points Group HQ’s website: www.incorp.asia Connect with Dorriz Tay at dorriztay@incorp.asia Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 12

  13. IN.CORP GLOBAL PTE LTD 30 Cecil Street, #21-08 Prudential Tower, Singapore 049712 Phone: WhatsApp: E-mail: Website: +65 6812 1611 +65 8699 8821 info@incorp.asia incorp.asia OUR REGIONAL PRESENCE The information contained herein is intended for general information purposes only and shall not be regarded as professional advice. Readers are therefore advised that before acting on any matter arising from these notes, they should discuss their particular situation with the Firm. No liability can be accepted for any action taken as result of reading the notes without prior consultation with regard to all relevant factors. FOLLOW US ON: Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved. Last updated Feb 2020 | 13

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