As a partner with Baker Tilly, Tina Huisman specializes in evaluating financial controls, construction contract auditing, and financial statement audits—primarily with hospitality and real estate owners, operators, developers, and construction contractors. In the face of the rapidly escalating COVID-19 pandemic—with no end in sight yet—she spoke to LODGING about what those in the especially hard-hit hospitality industry can do to prepare for an uncertain future, stressing the importance of working with professionals and focusing on cash flow.
How are you trying to keep things moving in the midst of this crisis? What sort of approach are you taking?
Our clients in the hotel and lodging industry are facing a very difficult situation, one that requires a radical change in virtually every aspect of their business, including financial planning. So, while we are working with them on their audits, tax returns and tax planning during what was the traditional “busy season,” we are also now proactively helping them with cash flow strategies to weather the crisis.
We are following the situation around the clock, and delivering updates to our clients as quickly as possible and in a variety of ways. Our goal is to keep everyone as well informed as possible, making them aware of what is available, including SBA loans.
Perhaps most important is just being there and letting them know we can help them with small things like cash flow projection now while we’re all trying to figure it out
What advice do you have for the hotels you’re working with now, given that it’s changing on almost an hourly basis?
The biggest advice I have for them is stay calm. We just don’t yet know what the consequences will be. For now, we advise clients to determine what their cash flow needs are for the next couple of months. Questions to ask include: What cash flow reserves do you have to get through the next few months? Can you make your fixed payments? Should you use a line of credit or extend an existing one to enable you to get past this?
Although we don’t know for sure, we’ve been hearing anecdotally that once travel and other restrictions are lifted, the hospitality industry should begin to recover rather quickly because people will be ready to leave their homes. Since we don’t know how long that will be, the area to pay close attention to is cash flow. As we know from previous downturns, liquidity and cash flow are critical, so it’s important to work with lenders and government programs.
What I’m encouraging clients to do is work with their professionals to be well educated, and positioned to take advantage of any incentives or support available.
Have you been in touch with your clients more or less at this time?
While the amount of contact we have with clients typically depends on the time frame of where we are with their audit, we have definitely increased communication with all of our clients—especially those in the industry who are facing more immediate risk such as hotels and construction contractors.
I’m mainly letting them know I’m there for them—asking what I and my colleagues can do to help them through this tough time, such as working with their accounting department on cash flow projections. Baker Tilly continues to issue alerts as the government takes new steps, so I have found it important to personally follow up with my clients as those happen too, drawing them to their attention.
What are some of the proactive steps that can be taken by hoteliers?
One is determining insurance coverage for business disruption caused by the pandemic. Even if there’s nothing at the forefront right now, they should get in touch with their insurance broker to understand options if business interruption is prolonged.
Are there any resources you would suggest to stay informed?
I always think the more information you have the better. Our Baker Tilly website has a dedicated coronavirus preparedness resource center to provide organizations with preparedness support for their employees, customers, and supply chain. Receiving and objectively evaluating information from numerous sources is a good idea.
Most of all, I stress staying connected to your professional advisors—attorneys, accountants, insurance agents—and stay informed about different incentives and programs that may be coming; those such as SBA loans, sick leave, and payroll incentives could provide needed support to smaller hoteliers.
