ILBA INFORMATIONAL UPDATE APRIL 7, 2020
ILBA MEMBERS MUST BE READY TO FILL OUT APPLICATIONS OR CLAIMS:
Drew Olson, a Partner in BDO’s Forensic Insurance & Recovery practice, states, “The importance of maintaining contemporaneous records during this difficult time cannot be overstated. In past major financial relief efforts, such as the 9/11 terrorist attacks and the BP Oil spill, the difference between funding and denial was if the claimant had maintained contemporaneous documentation on how they were impacted.”
Collect Your Records: Start by pulling together the important documents you have on file such as:
- Tax returns and other tax documents
- Insurance policies
- Payroll records
- Monthly utility bills for the past year
- Party and Room cancellations
- Sales history for the past three years
- Lease or ownership/title documents
- Inventory records
- Catering contracts, both open and cancelled
- Special Event cancellations
- Monthly Profit/loss statements – produce monthly’s during the loss period
- Capital improvement expenditures from 2017 to current
Track Everything – Get Your Journal Started:
- Set up a spreadsheet
- Add categories as you think of them (lots of ideas are provided herein).
- Backtrack to the first day you had to close or partially shut down and/or switch to all off-premises service; recreate the steps you took as closely as possible.
- Record everything on a daily basis, like a diary; be meticulous and dedicated. In a week you won’t remember what happened this week; in a month, the details will be a blur.
- Have an independent third party — your accountant or bookkeeper — verify financial documents monthly and get them notarized.
Below find examples of Journal Entries:
- Change in operating hours
- Change in menu and menu pricing
- Maintenance records and invoices
- Change in traffic counts
- Promotion costs for menu deals or gift cards
- Licensing payment adj. or forgiveness
- Marketing expenses for advertising, public relations or increased presence on social media
- Daily sales (by type of service — takeout, curbside pick-up, drive-thru or delivery)
- Delivery costs, or car expenses if you’re delivering directly to customers
- Special equipment purchases (e.g., holding equipment or disposables for off-premises sales)
- Special electronic equipment and software purchases (e.g., for off-premises sales and curbside pickup)
- Special service expenses (e.g., signage, dedicated parking for curbside service, etc.)
- Cleaning/janitorial expenses (especially for following COVID-19 protocol)
- Mortgage or lease payment adjustments or forgiveness
- Professional services (expenses for legal, accounting, consulting, etc.)
- Vendor changes (changes in vendor contracts, switch in vendors)
- Payroll costs and adjustments from previous payroll periods (i.e., changes in hourly wages, group health care premiums/benefits, severance pay, etc.)
- Changes in number of employees (layoffs, furloughs, reduced hours, etc.)
- 1099 forms for independent contractors or 2019 employees who would otherwise be employees in 2020
- Inventory changes (reduction in quantities/deliveries, changes in pricing, food you donated, write-offs due to spoilage, replacement inventory, loss of any discounts for bulk purchases, ingredient/supply substitutions and shortages, etc.)
- Lost holiday revenue (compared to prior year, e.g., St. Patrick’s Day, Easter, Mother’s Day, Memorial Day)
- Lost special events (vs last year, e.g.Cubs/Cards/Sox Opening Day, Big Ten Sports, IHSA Basketball, March Madness, Graduations, Stanley Cup, Indy 500, Masters, Poker Runs, Queen of Hearts)
- Lost Sports Leagues (vs last prior year, e.g. Golf, Softball, Sand Volleyball Leagues)
Daniel D. Clausner