In the midst of an almost complete halt of activity across global economies, the conversation is beginning to shift towards strategies that will bring about quick and sensible recovery.
With Malta embarking on its own re-start project, testing the waters to see the impact of social distancing relaxation measures, George Vella, Grant Thornton Partner heading the Advisory Services team, discusses the absolute importance of building business resilience throughout this difficult time.
To begin with, Mr Vella was asked how the pandemic has impacted the audit, tax and advisory firm.
“Our business model is based on creating strong and long-standing relationships with our clients. Above all else, this means standing by our customers in difficult times and that is exactly what we have been doing since the start of the COVID outbreak.
“It has been and will continue to be a matter of endurance and commitment coupled with hard work to go beyond.
“In terms of our commitment to our most valued asset – our people – we have clearly and unequivocally assured our people that their employment will not be affected – the firm is adamant to weather the storm whilst minimising its effect on our people.”
Businesses in different industries are facing distinct realities. Those operating in the entertainment, tourism and hospitality sectors have been harshly impacted – mitigated by increased Government aid directed to such industries.
While different businesses face different realities, Mr Vella believes that ensuring an adequate level of cash flow is of paramount importance.
“Cash flow is the single-most distinguishing factor between the eventual winners and losers. Creativity, innovation and a clear resolve as to how we are going to defeat the common enemy, in the most cost-efficient way, will play a very significant role,” he says.
Acknowledging the importance of cash flow, various Government measures have been aimed in this regard, such as providing funding to secure business and personal loan moratoriums, funding to guarantee business loans and tax and VAT payment deferral schemes.
Asked about what advice he has to give organizations on how to manage their money, especially those who may not be accustomed to crisis-accounting, Mr Vella says:
“Use it wisely and productively – now more than ever before. Let us not come out of this period thinking like there is no tomorrow as we used to think pre-COVID.
“Whoever had lost sight of the importance of saving that was so dear to our predecessors should re-assess the company’s working capital management and start building cash reserves, at least once we weather this storm.”
Mr Vella also believes that Malta is better placed to deal with the shocks brought about by COVID-19 thanks to the strong economic performance experienced in recent years.
“It is clear that the country can afford to give top priority to the health of its people because it can afford to pay for it.
“The measures that have been announced all have been effective in shoring many sectors of the economy. The measures are not cheap and will cost Government dearly – this can only be done because our debt to GDP ratios were at record lows before COVID.”
Turning to issues falling outside cash-management, Mr Vella is asked about difficulties faced by employers in managing their staff remotely. Mr Vella contends that there has been an upside to this situation, adding that he has observed a general improvement in focus and determination within staff at Grant Thornton.
“If properly managed, remote working provides a sustainable way forward for business, introducing efficiency gains.
“Hopefully, the sense of entitlement that has creeped into our mentality, due to the general increase in welfare experienced over the years, will quickly go away and that is extremely important in addressing complacency.
“My advice is simple – treat your employees as adults and they will act as ones, treat your employees as kids and they will surely act as such.”
Finally, Mr Vella is asked about how long he thinks Malta will take to recover, assuming no other major events occur and COVID-19 is dealt with in 2020, he is pragmatic in his response.
“I believe that it is going to take long. Judging from the recoveries we experienced from September 11, 2001 events coupled with the ensuing financial crisis, and seeing that this has had a worse direct impact on a much wider cross-section of the world population, I believe that we are facing hard times ahead. More important to get tough and get on with it.”
Mr Vella firmly agrees that there is a lesson to be learnt by many businesses who failed to build up buffers while the proverbial going has been good.
“Unfortunately, human beings allow greed to shorten their memory in a significant manner. This has happened time and time again. Hopefully, the effects of COVID are so profound on our psyche that we manage not to forget the lessons we have learnt in this difficult time.
Get in touch with Mr Vella on firstname.lastname@example.org