How Will COVID-19 Impact Your Commercial Agreements

As more and more business embrace remote working capabilities to cope with the threat posed by COVID-19, one should be mindful of the various ways in which the virus may impact their commercial arrangements and regulatory requirements. While we are also learning the full extent to which the COVID-19 will impact us on various areas, we recommend revisiting the below areas to assess the potential impact of COVID-19:

Impact on Commercial Agreements

The global economic and regulatory impacts of the COVID-19 are likely to create serious repercussions in commercial agreements for many companies across various industries. The impact of the virus on your business and under a specific contract will have to be evaluated on a case to case basis with the help of a legal expert. You can start by reviewing which contracts may be affected by the COVID-19 and identify relevant clauses, such as:

  • “material adverse event” or force majeure clauses – Assess whether the current circumstances permit any party to assert any ground for avoiding or pausing performance under the contract;
  • notice requirements – Review whether you need to give any notice or check if other provisions exist within the contract that may need to be triggered in order to assert your contractual right or defense;
  • clauses relating to a “change in law” – such as declaration of “national emergencies,” by any country;
  • termination rights and conditions;
  • dispute resolution provisions

Always bear in mind the strategic and commercial considerations when deciding whether to take certain steps. Also, check with your insurer whether your loss of profit insurance may cover any losses suffered due to the COVID-19 outbreak.

Impact on Employment Contracts

The outbreak of the COVID-19 presents a number of employment-related considerations. Employers should prioritize the health- and safety-related impacts on the workforce.

If an employee contracts the virus, you must consider how to communicate this information to potentially exposed employees while protecting the privacy of the employee with the infected. Employees who contract the virus while on duty travel or at work may be entitled to benefits under workers’ compensation insurance.

Employees should be regularly informed about any existing and update in policies, programs and practices that may be impacted by COVID-19.

Cybersecurity and Customer Commitments

With the potential for lockdown of cities in order to prevent or slow down the spread of the COVID-19, many companies may decide to implement or expand employee work-from-home programs in the coming days. While these programs allow for business continuity, they also pose increased cybersecurity risks by creating several avenues for unauthorized access to company systems and information. Hence, companies must ensure necessary cybersecurity policies are in place to ensure customer commitments prior to initiating or significantly expanding remote working capabilities.

Additionally, data management policies and policies that govern the acceptable use of company systems are essential. The ease of access to personal services and devices coupled with insufficient cybersecurity protections or noncompliance with company data management policies can create significant threats of data leakage or unauthorized access to your internal or customer data.

Companies should also keep in mind the applicable privacy laws (like GDPR) when collecting information about employees or customers which you are additionally collecting, such as health records and travel itineraries. If you would like to know more facts about the COVID-19 virus and figure out how it would impact various aspects of your business get in touch with us.

For more insights on how to mitigate COVID-19, download COVID-19: Impact on your business

Make Your Business Ready To Mitigate COVID- 19

COVID-19 pandemic has changed the business world dramatically, and every business is being forced to adapt. It is important for businesses to take action even before the government decides to lockdown your city. On an average there is a 5-12 day delay from when someone is infected with the disease and it is actually diagnosed. You can see that, at the point of the lockdown the number of cases changes from an exponential growth curve to a flattening curve.

At this point it is a pre-requisite to have a business continuity plan in place by getting employees to work from home, encouraging employees to stay at home even after work hours, and reducing in-person interaction, businesses can save the lives of the general public and ensure business is not impacted.

The next several weeks will test the capabilities of our connectivity solutions, collaboration tools, help desk support and remote working capabilities. For most organisations it will be a herculean task to prioritize activities in this new reality; including the organizational challenges of transitioning and managing an almost entirely remote workforce.

The COVID-19 pandemic requires all of us to immediately revisit our operational contingency plans both internally and with our service providers. We are not saying that this will be easy. We will naturally go back to our contract, and wonder why our business continuity plan didn’t contemplate a global pandemic kind of a situation?

Given below are few action points which you can initiate over the next few days, to ensure the safety of your workforce and continuity of your supplier-managed operations. We have also mentioned how you can mitigate your operational risks when some of them emerges.

Assess the impact of business disruption

List out the activities being performed by your service providers from a business perspective and identify your business-critical processes and applications disruption to which will cause a single point of failures. Bucket your service providers to the below categories:

  1. Tier 1 Suppliers: Mission Critical Services providers who support the critical business functions from whom you need an uptime of 99.95%. These are the services which if disrupted will impact your customers mission critical operations.
  2. Tier 2 Suppliers: Compulsory service providers which are required to be continued inorder to ensure the continuity of your internal business processes, but the downtime of which won’t jeopardise your commitments to customers.
  3. Tier 3 Suppliers: Peripheral Service Providers whose inability to serve you will create discomfort in your operations, but can be managed with minimal friction.

You should first focus on the Tier 1 suppliers’ business and IT continuity plans and critically assess whether they meet your SLA requirements. Check with them to understand what measures they have taken to ensure your services are not disrupted. Most managed services agreements have a clause for disruption and contain DR plans. But, you also need to revisit your contract to make sure you have not restricted remote working and cloud capabilities in order to enhance security.

Also communicate to your business and customer stakeholders about your BCP as you are part of their vendor ecosystem. 

Develop remote working capabilities

The need for social distancing will likely increase over the next few weeks. For those companies that already have work from home option, it’s a matter of scaling up. However, for organizations that have not yet started, or are piloting these programs, this could pose a significant challenge involving:

  1. Hardware scale up – Purchase of new laptops and datacards
  2. Network access and security – Purchase of new VPN licenses and security tokens
  3. Work from home policy – Employees will need training and guidance on how to work and how to think about work.
  4. New communication channels – To keep the workforce informed, engaged and productive.
  5. System and policy changes – To accommodate any changes to benefits, leaves, flexible work arrangements.

All these activities require co-ordinated efforts from an effective change management team to ensure proper training and faster adoption. Companies must also ensure necessary cybersecurity policies are in place prior to initiating or significantly expanding remote working capabilities.

Identify areas for cost optimisation

Though rarely emphasized in business’s consideration of risk, the potential economic losses from infectious disease outbreaks are massive. Global economy will be impacted due to decreased consumer purchasing power. Industries like travel, transportation and entertainment are in the frontline for taking the hit. In this scenario every organization should focus on developing a cost optimization strategy in order to ensure business resilience.

We recommend starting by analyzing contracts to see if force majeure clauses or “material adverse event” clauses can be invoked, rationalizing software licenses, renegotiating rate cards. Embracing new technologies for routine work like using robotic process automation could also result in long-term savings.

If you don’t have a business continuity plan in place we can help you in formulating your COVID-19 virus prevention & crisis management strategy. If you would like to know more facts about the COVID-19 virus and figure out how it would impact your business get in touch with us.

For more insights on how to mitigate COVID-19 and checklist to prepare your business continuity plan, download COVID-19: Impact on your business

How To Legally Avoid Paying Taxes

It’s basic human nature to put the tax bill in the back of your mind and focus on generating income. Until they find out that they have a huge tax bill to pay, usually at the end of a great year. March is when people start figuring out that the taxes are about to wipe out their this year’s hard earned money. That is the epiphany moment when this question pops up in their mind ‘How can I avoid tax?’ or ‘How can I reduce my tax liablility?’

The unfortunate answer that we have for this question is that you should have asked us this question a year back. Don’t confuse tax avoidance with tax-evasion. Tax evasion is a crime, but tax avoidance through proper tax planning is legal.

an ounce of prevention is worth a pound of cure

Reduce your Future Taxes

You should start putting together your tax optimization strategy well before you actually start earning the money. Your ability to reduce this year’s taxes is limited, but there are plenty of things you can do to avoid high tax bills for next year and the years that will follow.

What’s happened has already happened. There could be a few exemptions that you might be able to take advantage of to reduce your current tax bill. There are few things that might have been overlooked, maybe your business shouldn’t have been a tax resident in India in the first place or maybe you should have done an income allocation to save a part of it from being taxed.

You probably aren’t going to have much head room to reduce your current year’s tax bill. But with proper planning- however, you can change your future for good. We can together create a strategy that will help reduce your effective tax rate.

Does Your Startup Need a Business Consultant?

We hate spending money on things we think we can do ourselves. Maybe you feel the same way about seeking advisory services for your business too. Why should you pay a business consultant when you could manage your finance yourself?

Starting a new business is always exciting. The economy is growing at a steady rate, which means your startup is enjoying more businesses and getting bigger day by day. At some point, however, you will need to start thinking about your startup’s finances and whether you need a expert to manage your finances.

Given the quantum of challenges that a start-up has to tackle, hiring a large scale consultancy business at an exorbitant cost is an unnecessary expense that only a few startups can afford. Now that brings us back to the pertinent question, whether a business consultant is required to be hired? The answer is a big YES. There are many business consultants who offer affordable services for smaller companies so that cost does not become an hindrance for your growth any more.

We are going to take a look at how an experienced business consultant can help your startup grow at a healthy rate and reach new heights:

  1. Setting a Target: Growth is always not guaranteed, especially with startups. Just because you’re growing on the back of new customers and business today, doesn’t mean they will continue to flow tomorrow. Instead of relying completely on new client winnings to push your business forward, you can actually use good financial management techniques to help maintain a steady rate of growth. An experienced business consultant can help you set up your budgets and track them through the year by providing you accurate forecasts. So that you don’t have to face any surprise when the books are closed in March.
  2. Develop a Strategy: Where do you see your business in five years’ time? Do you have the right entity structure to optimize tax? Where to set up your new branch to avail the tax exemptions? Is my business model scalable? This can also be business decisions like whether to hire more employees now? How to structure your employee benefits in order to attract & retain the best talents? Are you burning your cash at the right places to grow? You can avoid a lot of startup mistakes and ensure a steady rate of growth if you engage the right business consultants at an early stage.
  3. Manage Business Risks: Risk management is both easy and difficult. It is easy to identify the risks once you are facing them. On the other hand, foreseeing the risk and mitigating it can be rather complicated. Risk management is an important part of any business as the regulatory and dynamic business environments creates a lot of opportunity for the business to go wrong. Working with business consultants will help you to evaluate your risks and have better control over them.

Some of these questions posed above are often too difficult to answer by yourself. To have a sound strategy and financial plan for growing your business, talking to a business consultant is the way to go.