It’s already clear COVID-19 will have a permanent impact on the TMT industry. Consumer demand has dropped precipitously across the entertainment sector – from television to film and live events, such as concerts and sports – and companies have all but lost sight of their supply chains in everything from computer and electronics to communications and network equipment, publishing and semiconductors. That’s made it tricky to balance demand with supply, although those with robust inventory on hand prior to the pandemic are reaping short-term benefits as they fulfill orders with available stock. The mass-shift to working from home has also forced changes, applying unprecedented pressure on telecommunications networks and spiking call-center activity for technical support, just as call-center operators are struggling to maintain staffing amid the pandemic.
Working capital and cash management is an area of intense focus, and we expect to see new forms of cash pooling and new working capital forecasting models emerge as TMT companies seek to understand their capacity to make required tax payments, seek opportunities to defer tax obligations, and seek net operating loss carryback opportunities. Finally, companies with significant live events that have been cancelled or deferred (such as concerts, film releases and software-user conferences) are reviewing the impact on revenue, income, and their sales pipeline. Software companies, in particular, rely on large, global user conferences to create and close significant opportunities.
Actions you can take
- Conduct end-to-end supply chain risk assessments; including programs for a supplier counter-party risk assessment
- Model alternate supply scenarios and trade-offs
- Actively review and test controls that monitor for supply-chain fraud and compliance
- Develop new supply chain forecasting models to understand product availability
- Segment receivables by COVID-19-affected customers to understand exposure
- Model impact on delayed receivables against opportunity to delay payments
Claims and compliance
- Evaluate client loss/risk situations and engage with claims services to analyze, prepare, present and settle complex business continuity claims
- Evaluate effectiveness of compliance and integrity management to avoid non-compliance
Financial matters and tax
- Assess financial impact of closures and stranded costs such as risks, provisions and impairments
- Ensure forecasting of changing supply/business models is robust and understood by markets
- Evaluate and advise on treatment of potential catastrophic losses for tax purposes
People measures and restrictions
- Explore human capital considerations, including crisis management frameworks and contingencies
- Test and implement new technologies/remote collaboration platforms if situation prolongs
- Explore and implement managed services to allow companies to focus on core activities
Questions you should ask
- What tax incentives and treatments should we consider?
- Can we work with technology and ecosystem partners to quickly understand how our markets have changed, and adapt to those new dynamics and risks?
- Do we have the tools and models to develop new supply chain, cash, revenue, and cost models?
- Are we considering all of the physical and cyber security threats our company and people are exposed to?