The first of the month arrives this week, and if these were normal times, organizations around the world would be cutting checks to raw-material suppliers, lawyers, landlords, and almost anyone else who provides a product or service a company needs to operate.

But these are anything but normal times, of course, since the novel coronavirus has shut down large swaths of the global economy. And while many companies have seen their revenues evaporate, the bills have not, leaving some executives at even large organizations with a dilemma they never expected to face: Whom do they pay and whom do they not? “For small businesses, they’re absolutely there; larger organizations are not quite there yet,” says Nathan Blain, a Korn Ferry senior client partner and global leader of the firm’s Organizational Strategy & Digital Transformation practice.

No one can put a finger on exactly how much in bills is due in April, but the US real estate market has $81 billion of rents due alone. Restaurants, hotel owners, retailers, and others have laid off literally millions of people in the past two weeks. And several big retail chains in both the United States and Europe made waves last week telling their respective landlords they were not going to pay rent. But experts believe the dilemma will really hit home for many larger enterprises throughout April, as shelter-in-place rules have been extended in some cities and added in others, keeping many businesses shut.

Blain says that, in the hierarchy of costs, taking care of the organization's people should be the firm's top priority. That means paying employees and contract workers for work they've already done. After that, pay cuts or even temporary unpaid furloughs may be needed, he says, but calls those preferable to layoffs, as it avoids the cost of ramping up staffs whenever the virus fades. “Talent is so scarce, it was before this, and it will be afterward,” Blain says.

But after workers, the new balancing act is determining which vendors can potentially afford not to get paid right away. Companies will likely focus on their vendors who "keep the lights on and the plants running," says John Davitt, a senior client partner with Korn Ferry's Global Supply Chain Center of Expertise. For instance, a trucking company is going to pay its fuel supplier, Davitt says, because without fuel the trucks can't go anywhere. A company also may have a small supplier of a key product component that, if not paid, may go out of business. At the same time, there are other organizations which, while offering essential services, can take a short-term financial hit. “Utilities and law firms and landlords, fairly or unfairly, are grouped as vendors that can survive one to three months of nonpayment,” Blain says.

Companies could also try to negotiate to pay a vendor something now and then pay the rest when normal business resumes. But many vendors don’t like that, experts say, because they worry that they’ll never see full payment. They’d rather take nothing now and get everything they are due at a later date. Indeed, many companies will only except a lower amount they're owed only if the cash-strapped company files for bankruptcy protection. 

In some cases, governments have made the question a little easier for companies to answer, at least in the short term. Several US cities have put in place moratoriums on evictions of both residential and commercial tenants. And some businesses have effectively hung out a “you can pay us later” sign. Dozens of banks have agreed to halt new foreclosures and temporarily waive mortgage payments for some borrowers. At the same time, about 70 telecommunications companies have pledged not to cut off broadband or telephone service for the next 60 days to any customers—even ones who are unable to pay their bills.

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