Small and mid-sized businesses are some of the hardest hit by the coronavirus outbreak, with consumers hunkering down at home instead of venturing out into the world and spending money.
While social distancing may be crucial from a public health perspective, it is hurting the businesses such as restaurants, stores and salons that rely on foot traffic to stay afloat. Governments in Denmark and Norway have even ordered the temporary shutdown of many of these types of establishments as a preventative measure.
Olli Savikko, a senior relationship manager at Nordea in Helsinki, recently spoke to a Finnish customer that operates several sports facilities.
“Last week, everything was fine. And now people are calling to cancel their events. It’s hitting smaller businesses that sell directly to consumers especially hard,” he says.
One of the main challenges for these companies has been plummeting sales, which is leading to concerns about having sufficient liquidity and working capital.
“The one thing in common for everyone is a lack of visibility. No one knows what will happen tomorrow or in one week’s time,” says Savikko.
Liquidity is key
Despite all the uncertainty and turmoil the coronavirus pandemic has unleashed on the business world, there are some things companies can do to weather the storm.
With many customers nervous about future sales, there’s a lot of focus on ensuring companies are as liquid as possible, says Rasmus Maibom Holm, senior relationship manager at Nordea in Esbjerg, Denmark.
“Liquidity is important. We’re really trying to convey that to customers, and a lot of them have already realised this,” he adds.
Holm has been in dialogue with all of his customers this week to ensure they are doing a risk assessment and drafting realistic liquidity forecasts and cash flow budgets. He encourages them to map out their future expected sales alongside potential cost cuts, for example from rents or salaries, and come up with a plan for converting inventory to cash. He is also trying to ensure that they take all risks into account, for example the dramatic weakening of the Norwegian krone, which can hurt Danish companies with sales in Norway.
Advice from Nordea relationship managers across the Nordics:
- Don’t do anything hasty
- Draft a realistic liquidity forecast and clear cash flow budget
- Cut unnecessary costs
- Possibly convert inventory to cash
- Take advantage of bank offers, such as Nordea’s instalment-free periods and other credit facilities
- Utilise government aid packages if possible
- Stay in close dialogue with your bank relationship manager
Instalment-free periods and other relief
The battered Norwegian krone is one of many issues Fabian Tandberg, a Nordea client executive based in Oslo, has been discussing with his customers. It will be a big problem for businesses if it continues, he says. But for now, the most urgent topic people are focusing on is liquidity.
Against that backdrop, Nordea has decided to offer instalment-free periods to small and mid-size companies in need of help due to the corona outbreak, as well as other credit facilities.
“Customers have shown a lot of interest in the instalment-free periods, while some are in need of a liquidity buffer to help them through the coming months,” Tandberg says.
It’s also important for companies to be aware of and utilise the support packages that governments are offering. For example, the Danish government has enacted an aid package to help companies cover certain costs, such as employees’ salaries. Governments in Sweden, Norway and Finland have announced their own support measures for businesses hit by the crisis.
This government relief has prompted many of the calls Gun Wickman, a Nordea relationship manager in Stockholm, has received from customers.
“They’ve heard about the government support package in the news, and they want to know how to access it,” says Wickman, who has spent much of the past week on the phone with worried clients. She adds: “There’s a lot of uncertainty out there, especially because we don’t know when things are going to recover. We have to take it day by day to try to be there for our customers, to listen and try to help them.”
For more information, keep an eye on local Nordea websites:
The information provided within this website is intended for background information only. The views and other information provided herein are the current views of Nordea Bank Abp as of the date of publication and are subject to change without notice. The information provided within this website is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.
The information provided within this website is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided within this website has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.
Nordea Bank Abp is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.
The information provided within this website may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Bank Abp.