Financial planning strategy to navigate the covid-19 crisis.
TOPIC : Financial planning strategy to navigate the covid-19 crisis.
Host : Wiliam Kinai, ,
Host's Profile
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Designation:
Master of Business Administration (Financial Management), Bachelor of Commerce (Accounting), Postgraduate Certificate in Academic Practice. Has 16 years’ experience teaching financial management. Has consulted for 6 years on financial management and strategy for private and civil society organizations. Has 4 years’ experience in curriculum development and new training program development. He is a doctoral student studying the relationship between off-balance sheet leases and financial distress among Kenyan companies.
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THEME : Supporting MSMEs by creating equitable opportunities for MSMEs across the country
MONTH : June 2020
Focus Areas :
CHAT TRANSCRIPT
Timestamp
Source
Message
2020-06-19 06:32:15
Good morning everyone, what a beautiful day it is already!
2020-06-19 06:32:15
2020-06-19 06:35:58
Welcome to the Inuka Mentorship chat session. Our topic for today is Financial planning strategy to navigate the covid-19 crisis and our host for today is Mr. William Kinai.
2020-06-19 06:35:58
2020-06-19 06:40:34
Mr. Kinai is an entrepreneur himself and can relate to the effects of the Covid 19 pandemic to businesses. Additionally, he is a Finance Management Expert with 16 years experience teaching financial management and 6 years consulting in financial management and strategy for private and civil society organizations. We look forward to his insights on today's topic
2020-06-19 06:40:34
2020-06-19 06:53:38
As we await the official start, you are welcome to post your comments and questions around the topic of the day and our host will address them.
2020-06-19 06:53:38
2020-06-19 06:54:47
I see afew people have joined in. Juma Fred, Maek Maiguah Good morning!
2020-06-19 06:54:47
2020-06-19 06:56:23
I am glad to be here today once again. I hope more people will join to benefit from this interesting topic.
2020-06-19 06:56:23
2020-06-19 06:56:30
Good morning
2020-06-19 06:56:30
2020-06-19 06:56:58
Good morning everyone
2020-06-19 06:56:58
2020-06-19 06:57:00
Thank you Angella, we are glad to be here. Looking forward to today's session.
2020-06-19 06:57:00
2020-06-19 06:58:44
Glad to have you Juma. Yes indeed. Please feel free to invite colleagues in business to join in
2020-06-19 06:58:44
2020-06-19 06:59:42
Good morning Maek. Glad you could join us.
2020-06-19 06:59:42
2020-06-19 07:02:35
I can see my brother Nepthone Aduma in the house. Welcome, brother.
2020-06-19 07:02:35
2020-06-19 07:03:11
Looking forward to the session today
2020-06-19 07:03:11
2020-06-19 07:05:13
Ladies and gentlemen, our host is now here. Please welcome Mr. William Kinai who will take us through the session
2020-06-19 07:05:13
2020-06-19 07:06:02
Good morning Mr Kinai, finances are dwindling for most businesses at this time. What are some of the measures you recommend for SMEs to take to protect themselves from collapse?
2020-06-19 07:06:02
2020-06-19 07:06:24
Welcome, Mr. William Kinai. It's good to be here.
2020-06-19 07:06:24
2020-06-19 07:07:08
everyone, greetings from the City of Kisumu..
2020-06-19 07:07:08
2020-06-19 07:07:39
Good Morning
2020-06-19 07:07:39
2020-06-19 07:08:15
Good morning sir.
2020-06-19 07:08:15
2020-06-19 07:08:54
Good morning, I am pleased to here this morning. Kindly, post you financial management concerns.
2020-06-19 07:08:54
2020-06-19 07:08:57
Do we by any chance have the exact number of businesses that have collapsed as a result of Covid-19 in Kenya?
2020-06-19 07:08:57
2020-06-19 07:09:13
Good morning Mr. Samba
2020-06-19 07:09:13
2020-06-19 07:09:29
Good morning everyone. Good to be here.
2020-06-19 07:09:29
2020-06-19 07:11:19
Do SMEs have hope of getting funding during this pandemic?
2020-06-19 07:11:19
2020-06-19 07:12:03
Thanks Joy.
2020-06-19 07:12:03
2020-06-19 07:13:07
To prevent your business from collapsing during Covid-19: 1. Reduce your operating costs.
2020-06-19 07:13:07
2020-06-19 07:13:44
Key cost to reduce are your primarily your fixed costs.
2020-06-19 07:13:44
2020-06-19 07:13:58
We look forward to an insightful session. If you find something that resonates with you, share it on twitter with the hashtag #InukaSMEchat. Tag @InukaSME and @Williamkinai
2020-06-19 07:13:58
2020-06-19 07:15:34
With customers also facing cash flow challenges, how does the business manage its working capital to ensure continued operations?
2020-06-19 07:15:34
2020-06-19 07:15:38
Thanks Joy.
2020-06-19 07:15:38
2020-06-19 07:15:52
I just realised most businesses are vulnerable to losing the trust of key stakeholders in this pandemic season. How can businesses balance their approach in minimizing spending and not hurt their staff, suppliers and clients at any given point?
2020-06-19 07:15:52
2020-06-19 07:16:01
To prevent your business from collapsing during Covid-19: 1. Reduce your operating costs.
2020-06-19 07:16:01
2020-06-19 07:16:25
Key cost to reduce are your primarily your fixed costs.
2020-06-19 07:16:25
2020-06-19 07:17:19
Reduce your rent/occupancy costs & staff costs.
2020-06-19 07:17:19
2020-06-19 07:17:57
Which are the primary fixed costs that can be reduced without adverse effect to the recovery after COVID-19.
2020-06-19 07:17:57
2020-06-19 07:19:25
Hi Mr Kinai. Most businesses are struggling with cashflows but they are also required by KRA to pay their taxes. How can they strike a balance?
2020-06-19 07:19:25
2020-06-19 07:19:45
Thank Juma. I think SMEs have hope. The pandemic and movement restrictions will not last forever. As normalcy returns, there will be new opportunities for SMEs.
2020-06-19 07:19:45
2020-06-19 07:20:13
Kinai, this question by Nepthone, whats your take? Minimizing expences without affecting human or capital resourcesor clients.
2020-06-19 07:20:13
2020-06-19 07:23:52
Biginers don't get finding even if the future is percieved bright ....how can they be non eliminatedly be enlightened
2020-06-19 07:23:52
2020-06-19 07:23:55
Yes, SMEs do have funding opportunities. Most banks are lending, most micro
finance organizations are lending. SACCOs did not suspend lending
2020-06-19 07:23:55
2020-06-19 07:23:56
Thank you Mr. Kinai. What about at the moment, do you think they stand a chance before banks?
2020-06-19 07:23:56
2020-06-19 07:26:14
I do not have reliable data on the number of businesses that have collapsed since the onset of the COVID-19 pandemic. However, the Ministry of Labour is collecting data on the number of jobs lost and the number of people who have been sent on unpaid leave
2020-06-19 07:26:14
2020-06-19 07:28:23
Businesses must proactively manage their working capital. First businesses have to reduce credit sales. Collect debtors. Reduce operating costs including reducing investments in inventories
2020-06-19 07:28:23
2020-06-19 07:30:05
Companies that have been unable to pay salaries have sent their employees on unpaid leave instead of outright layoffs.
2020-06-19 07:30:05
2020-06-19 07:31:01
Suppliers understand the difficulties that the average business is facing. A business owner ought to take the initiative to negotiate with suppliers for extended credit periods.
2020-06-19 07:31:01
2020-06-19 07:32:14
There has been a suspension of listing of defaulters on the Credit Reference Bureaus databases for one year with effect from 1st of April 2020
2020-06-19 07:32:14
2020-06-19 07:32:56
Banks are extending the loan terms and restructuring the payment terms at the request of their customers
2020-06-19 07:32:56
2020-06-19 07:33:21
Some banks are providing loan holidays during the COVID-19 period
2020-06-19 07:33:21
2020-06-19 07:33:46
Thank you for this info Mr Kinai, how can MSMEs improve their access to borrowed capital?
2020-06-19 07:33:46
2020-06-19 07:35:07
Rent/occupancy expenses can be reduced. Move to less costly premises.
2020-06-19 07:35:07
2020-06-19 07:36:04
Do you think Covid-19 has come to affirm the now and the future of online business?
2020-06-19 07:36:04
2020-06-19 07:36:54
You can also reduce your employee-related costs by reducing salaries of managers, reducing travelling allowances, and as a last result sending excess staff on unpaid leave
2020-06-19 07:36:54
2020-06-19 07:38:22
Thank you Mr. Kinai. This is quite a lifeline.
2020-06-19 07:38:22
2020-06-19 07:39:01
If your business owes KRA money take initiative to negotiate a tax liability plan.
2020-06-19 07:39:01
2020-06-19 07:39:56
The Government of Kenya has provided Small businesses with tax relief by reducing the corporation tax rate and the turnover tax rate
2020-06-19 07:39:56
2020-06-19 07:41:12
by consulting with your CPA or tax advisors, a small business will be advised on how to legally reduce tax liability.
2020-06-19 07:41:12
2020-06-19 07:46:37
Supposing that the business is able to pay staff salaries even with reduced workload the company can seek creative ways of maintaining staff for example reducing the number of days worked per week for reduced pay rather than outright layoff.
2020-06-19 07:46:37
2020-06-19 07:49:03
A company may categorize staff as core function staff and support function staff. The core function staff are staff who will be performing duties even during the COVID-19 season. These staff maybe retained under flexible terms of employment such as reduced working days, reduced pay and reduced allowances. Support staff may also be placed on similar flexible work arrangements
2020-06-19 07:49:03
2020-06-19 07:50:37
Wow! This is more elaborate, thank once again.
2020-06-19 07:50:37
2020-06-19 07:51:27
Thanks for your question. New businesses are high risk. The level of business risk is higher than the risk appetite of banks which provide debt capital. The appropriate financial strategies for new business ventures is to finance with equity (your own money).
2020-06-19 07:51:27
2020-06-19 07:52:32
Mr Kinai, do you think it wise for one to start a new business during a financial crisis?
2020-06-19 07:52:32
2020-06-19 07:55:53
Banks are still lending. If a small business meet the banks lending requirements it will be able to raise loan capital from a bank in Kenya today. The key banking requirements are evidence of cash flow- this is the reason banks require that you need to have banked for six months before they advance a loan, banks will also require you provide audited financial statements for at least three-years, and banks require you provide an explanation of the application of the funds that will be lent.
2020-06-19 07:55:53
2020-06-19 07:58:00
Which could be the best approach of auditing your business especially during this pandemic ?
2020-06-19 07:58:00
2020-06-19 07:58:07
True, unless the business speaks to the crises and demonstrates it. Perhaps then the bank may accept to take the risk. Mr Kinai what do you think, if a new business helps in crises?
2020-06-19 07:58:07
2020-06-19 07:58:35
Wow...this is great sir. Do you think the loan restructuring process by banks has helped SMEs?
2020-06-19 07:58:35
2020-06-19 08:00:56
An SME can improve their borrowed capital by 1. Banking all receipts and making payments via banking platforms - this provides the bank with a transaction history and insight into the cash flows into the business, 2. make an effort to develop an accounting system which will generate audited financial statements at the end of each financial year.
2020-06-19 08:00:56
2020-06-19 08:01:12
What's the best approach to successfully audit your business especially in this pandemic
2020-06-19 08:01:12
2020-06-19 08:03:09
Online businesses have been growing during the pandemic and will continue to grow. Small businesses must consider online marketing and sales. It is a business opportunity that can be exploited immediately.
2020-06-19 08:03:09
2020-06-19 08:03:43
Apart from banks, what other avenues can SMEs utilize to get funds?
2020-06-19 08:03:43
2020-06-19 08:04:23
It is a difficult time to start a business however there are opportunities arising from unmet needs. There will be successful businesses that will be established during the COVID-19 pandemic.
2020-06-19 08:04:23
2020-06-19 08:05:05
Have your financial records audited by a registered certified public accountant
2020-06-19 08:05:05
2020-06-19 08:07:04
Hi all, our time is almost up. The host will be answering the final questions before we wrap up
2020-06-19 08:07:04
2020-06-19 08:08:03
If a business is providing essential services during the COVID-19 pandemic and does not meet the bank lending requirements, the business could seek to raise funds from a variety of non-governmental organizations that are funding COVID-19 interventions.
2020-06-19 08:08:03
2020-06-19 08:08:39
Great advise, Mr. Kinai on reduce credit sales. Collect debtors. Reduce operating costs including reducing investments in inventories.
2020-06-19 08:08:39
2020-06-19 08:12:30
A small business can get financing from 1. Micro Finance Institutions 2. Saccos 3. Credit Companies. Saccos give the least costly loans. Micro finance Institutions are regulated and interest is capped at maximum of 3 per cent per month. Credit companies are mostly unregulated. Interest rate range from 4 per cent per month to 30 percent per month.
2020-06-19 08:12:30
2020-06-19 08:15:10
Thank you very much for your questions to raise loan finance make an effort to bank your receipts and make payments through your bank. Also make an effort to have your accounting records audited annually. These two practices will enhance your access to loan funding.
2020-06-19 08:15:10
2020-06-19 08:17:27
Ladies and gentlemen, we have come to the end of the session. Thank you so much for your participation it has made the session quite engaging
2020-06-19 08:17:27
2020-06-19 08:18:17
We also wish to thank our host Mr. Kinai for taking us through the chat session and his great insights on the topic
2020-06-19 08:18:17
2020-06-19 08:19:23
We hope you have learned something new
2020-06-19 08:19:23
2020-06-19 08:21:51
Thank you so much Mr Kinai and the participants. I have learnt something new.
2020-06-19 08:21:51
2020-06-19 08:22:44
Further resources that would be helpful in this topic are the Finance Management module and the Operations management module on Inuka. Find time to take the training
2020-06-19 08:22:44
2020-06-19 08:24:26
For those who joined late, remember you can access the transcript for today's chat session in the website that you can use to follow the discussion of the day.
2020-06-19 08:24:26
2020-06-19 08:27:14
Thank you Mr. Kinai. The session was very helpful.
2020-06-19 08:27:14
2020-06-19 08:28:16
We will close the chatroom in 15 minutes. Have a good day and weekend ahead
2020-06-19 08:28:16
Exit
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