PROSPER MAGAZINE: DIGITAL EDITION
COVID-19 CRISIS HIGHLIGHTS HIDDEN THREAT TO BUSINESS CONTINUITY
As the world adjusts to new ways of working and the aftermath of the Coronavirus, businesses that rely too much on one or two directors to sign off deals and authorise payments could be at risk if one of these senior leaders sadly succumb to Covid-19, or any other serious illness.
Richard Bull, a tax partner at national audit, tax, advisory and risk firm Crowe, said that sole traders were even more at risk.
“It’s not just coronavirus but any kind of illness affecting the owner, finance director or other key personnel that can cripple a business if contingencies are not in place to cover such an eventuality.`
“Suddenly everything is in chaos - who has the username/passwords for business banking? Who is authorised to sign important documents? If caught out, a firm could be hindered for several days or longer.”
Bull suggests that key personnel in a business should consider taking out a Lasting Power of Attorney (LPA) which lays out a strategy for business continuation.
LPAs are more usually taken out by the elderly – worried about their ability to cope. They specify who can step in to help with health, welfare as well as financial and legal issues, and where a person’s mental faculties become impaired, how it is best achieved.
An LPA is a comprehensive legal document signed by the individual, who chooses a trusted person or professional advisor to make decisions on his or her behalf about financial or personal matters should they become incapable of doing so for themselves, but they can be taken out at any age.
Bull said: “I believe LPAs, or an agreement akin to them, can be of great value in the business environment, particularly for small and medium-sized enterprises.
“Unfortunately, people do become seriously ill or tragically die young and not just from COVID-19, so this is an issue business ignores at its peril.
“It can be as simple as the business owner being incapacitated and nobody knowing how to access his or her emails to check on what orders need fulfilling.
“Companies need to establish comprehensive procedures for such eventualities – so everyone is clear about the emergency response plan.
“I recommend you speak to your advisors – they can put a structure in place and make arrangements to safeguard critical information and access codes. Ignoring this issue could put the continuation of the business at risk and affect the livelihoods, not just of the business owner but all staff employed.”