What Businesses Can Do To Stay Resilient During COVID-19

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

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/

Pointers on some of budget packages for Companies
Auto Inclusive Assistance Schemes*:
Job Support Schemes (JSS) for every local worker in employment

ƒ subsidy of 75% of wages for April & May 2020 on the first S$4,600 of gross monthly pay

ƒ subsidy of 25% to 75% on the first S$4,600 gross monthly wages for a further seven months
depending on the industry sector

ƒ pay-outs will be April 2020, May 2020, July 2020 and October 2020

ƒ 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
Foreign Workers’ Levy (FWL)

ƒ waiver of FWL due in April and May 2020

ƒ FWL rebates of $750 per month for each work permit and S pass holder in April 2020 and May 2020
* except for employers specifically excluded in the Employer Exclusion List as found in the below link:
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.

ƒ 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-
Rental Waivers on Government Properties

ƒ one to three months of rent waiver

A number of financing schemes managed by Enterprise Singapore:
In particularly

ƒ Temporary Bridging Loan Programme (TBLP)

ƒ Enterprise Financing Scheme - SME Trade Loan (SME TL)

ƒ 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
Singaporeansand/orSingaporePermanentResidents,determinedbytheultimateindividualownerships.
There are a number of other financing schemes, the below link provides details:
https://www.enterprisesg.gov.sg/financial-assistance/loans-and-insurance

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

ƒ each application is limited to one activity in a single oversea market (eg. trade fair)
Enterprise Development Grant (EDG)

ƒ objective is to help Singapore companies grow and transform;

ƒ 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

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

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.

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 MINUS 1
Days sales of inventory + 1

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)

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

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

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

+65 6812 1611
+65 8699 8821
info@incorp.asia
incorp.asia
The information contained herein is intended for general information
purposesonlyandshallnotberegardedasprofessionaladvice.Readersare
thereforeadvisedthatbeforeactingonanymatterarisingfromthesenotes,
they should discuss their particular situation with the Firm. No liability can
beacceptedforanyactiontakenasresultofreadingthenoteswithoutprior
consultation with regard to all relevant factors.
Phone:
WhatsApp:
E-mail:
Website:
IN.CORP GLOBAL PTE LTD
OUR REGIONAL PRESENCE
Copyright © 2020 In.Corp Global Pte Ltd. All rights reserved.
FOLLOW US ON:
30 Cecil Street,
#21-08 Prudential Tower,
Singapore 049712

What Businesses Can Do To Stay Resilient During COVID-19

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to What Businesses Can Do To Stay Resilient During COVID-19

Similar to What Businesses Can Do To Stay Resilient During COVID-19 (20)

Recently uploaded

Recently uploaded (20)

What Businesses Can Do To Stay Resilient During COVID-19