March 18th: COVID-19 Information Guide for Business Owners
For more information and updates on COVID–19, visit skytalegroup.com/covid-19
Dear Skytale Friends, We are all experiencing and living through an unforeseen pandemic in COVID-19. Our team is working diligently to support each other, and that includes our network, clients, and friends. We are living out our own motto: Deciphering Complexity into Clarity. At no time during our firm’s existence has that been more crucial than right now. We are taking a proactive approach in reaching out to ensure you know we are here to provide guidance and additional resources. If there is a chance you think we can help, please do reach out. We would like nothing more than to be a resource, partner, and friend to you during this time. Skytale has been hard at work listening to your concerns, fielding frequently asked questions, vetting resources, and identifying options and solutions for our partners and clients. In doing so, we want to share some thoughts and references regarding the financial and strategic realm that may assist you in the current state of business. We are grateful for your friendship and support which is why we believe that together we will get through this and land stronger than we were before.
Financial and Strategic Considerations
Our vast network of partners and clients are taking approaches which may vary by company protocols, state and even federal mandates. Based on our work and research, we suggest the following actions and precautions that may help any business — whether open, closed, or performing only emergency procedures. All of us have been impacted by this as our current businesses are embarking on a new trajectory in response. Please know that not all these options may be feasible for your specific business or practice and are provided as suggestions to keep you informed and prepared should you need them. If you would like support implementing any of these suggestions, please reach out to us.
- Revise your forecast or budget to determine the impact of a reduction in collections over the next few months
- If your practice is still open, consider calling patients with upcoming treatment to schedule now, while you are still seeing patients
- In the event of closure, get all canceled appointments on the schedule for a future date
- Consider adding workdays to your future schedule accommodate rescheduled patients
Payroll and Staffing:
- Depending on doctor contracts, associate doctor compensation should adjust according to revenue. Cases of severe slowdown or closure will likely require a conversation for expectations in coming weeks
- For owner doctors, consider temporarily discontinuing payroll, taking shareholder distributions instead for only what is needed at home to minimize payroll taxes and 401k contributions
- Consider pausing any discretionary retirement plan contributions
- Salaried employees must receive full salary for any week in which any work was performed. If you close the practice you must pay an “exempt” (salaried) employee for any week in which they do any work for the benefit of the practice. If you have salaried staff members working from home checking messages, responding to emails, working on billing, rescheduling appointments or otherwise, the exempt employee must be paid in full for the entire week, no matter how many hours they may work
- For an office closure, the employer may reduce the salary of an exempt employee if no work was performed for a seven-day period
- Legislation is pending that may impact how salaried employees are to be paid in the time of an illness of office closure
- The difficult decision must be made on whether to continue paying or furlough hourly employees. Consider the cost of hiring and training new staff
- If you plan to continue to pay employees, consider nontraditional work they may be able to perform in the event of practice closure i.e. admin and office work from home, cleaning, etc.
- If you choose not to pay hourly (or salaried employees), your employees may be eligible for unemployment benefits. Pending legislation will make it easier for employees to qualify for unemployment benefits by reducing waiting periods and not requiring job search during period of unemployment
Additional Information on Pending Legislation: The Families First Coronavirus Response Act (H.R. 6201) has been passed by the house and is currently in the Senate where it is expected to pass sometime early next week. The bill contains several important provisions that will impact your staffing decisions
- Emergency paid sick days: The bill would give employees 14 days of paid sick leave available immediately for those impacted by quarantine orders, or those who must stay home to care for their children. Business owners would then be eligible for a payroll tax credit to help offset the cost
- Emergency paid leave: The bill provides 12 weeks of job-protected paid Family and Medical Leave Act (FMLA) leave — of which the first 14 days may be unpaid —for those unable to work because they have COVID-19, are quarantined, are caring for someone with the disease, or are caring for a child due to related school closings. After the first 14 days, employers must compensate employees in an amount that is not less than two-thirds of the employee’s regular rate of pay. Business owners would then be eligible for a payroll tax credit to offset the cost (caps apply)
- Expanded unemployment insurance: The bill would direct $2 billion to state unemployment insurance programs and waive measures like work search requirements or waiting weeks to those either diagnosed with COVID-19, or those who have lost their jobs due to the spread of the virus
Note that these provisions have not yet been enacted and are subject to change. We will keep you updated as the bill is passed, or any other legislation is considered.
Other Business Expenses:
- Consider suspending any supplies or consumables purchases until offices are fully reopened
- Review all other expenses and reoccurring payments to see if any can be suspended
- Consider temporarily reducing your marketing spend – in particular, pay-per-click ads, etc. – since you likely won’t be able to schedule new patients
Credit Cards and Loans:
- Contact your credit card companies and request option to delay payments with waived penalties and interest
- Contact your lenders about making interest only payments in the event your office is closed or hours are reduced
- Contact your insurance agent and inquire about any business interruption insurance and details of the policy if applicable. We have found that business interruption insurance does not cover viruses, but it doesn’t hurt to catch up with your agent while you aren’t working, and ensure your coverage is otherwise adequate
Access to Cash:
- A Line of Credit is a better option for cash flow financing needs than credit cards and can provide fast access to cash. If you don’t have one, talk to your local bank about getting one
- The Small Business Administration (SBA) is looking to provide easier access to SBA backed loans
Personal Cash Flow Measures:
- Interest on federal student loans will be waived until further notice
- The U.S. government will postpone the April 15 tax-payment deadline for 2019 income taxes still due
COVID-19 In the News
Check the resources below for guidance and support from the ADA, CDC, ADP, Federal and State governments.
The American Dental Association (ADA) has up to date information they are gathering from Centers for Disease Control and Prevention (CDC). Information found here.
Centers for Disease Control and Prevention (CDC) guidance and information may be found here.
Automatic Data Processing, Inc. (ADP) information on Workplace Infection Control Practices Impacting Employees found here.
Families First Coronavirus Act | House Resolution 6201
H.R. 6201 Title-by-Title Summary, information found here. Please see relevant articles highlighted below that may have an impact on your business. Should you want to read the entire bill please find information here.
State and Local Support
Since the delay of federal legislative relief, each state’s plan for assisting small businesses will vary. Check often with your local governor’s office as well as local small business organizations and agencies for the latest on state specific assistance, resources and updates.