The coronavirus pandemic has had a profound impact on small-to-medium enterprises. In many countries, their entire SME landscape has been all but leveled; the disruption of supply chains and suspension of labor means most shops have shuttered for the time being. With so much uncertainty, even after four months of lockdowns, business owners face the possibility of picking up the pieces on their own once things slowly get back to normal.
If you are an accountant for SMEs, you are in a unique position to help businesses during this tumultuous time. Accounting services are especially valuable today, as essential businesses attempt to operate normally, and as the rest of the industries try to catch up. Below are some of the first things accountants must do when helping companies transition to the new normal.
1. Learn of all aid options and apply these to clients
Seek out information on financial aid, emergency funding, or other forms of assistance provided by local and national government agencies. Knowing these would help you assist clients who are in most need of public support measures, such as service and hospitality providers.
For the industries most affected by COVID-19, you can advise and guide them through the processes needed to secure claims. You can also help them identify opportunities for diversification, and access to emergency financing from the government. You might also want to re-negotiate fees and payment schedules to fit their circumstances.
If you are a member of national accountancy organizations or networks, keep in touch with representatives. They may know of aid from other countries or transnational companies, or practices that can be beneficial when translated into the local context.
2. Address urgent cash flow and business needs
Review and adjust cash flow forecasts to reflect the current situation. This is perhaps the most important service you can provide clients at the moment. Stress the importance of continuing payments to suppliers, as this will help prevent further economic collapse. Determine if cuts in sales will significantly affect their ability to meet debt payments as well.
Sit down with the business owner and see how employee payroll services can continue at this time. Examine if the business can sustain alternative ways of delivering goods and services, or if they can make cuts in other departments like marketing and sales. Scaling back the production for some items might be necessary as businesses adjust to the limited capacity of suppliers to deliver at this time. You should also look into insurance claims for financial losses.
3. Help them keep up-to-date records and contracts
Help them update financial records so they can monitor closely their situation during this time. In many countries, internal revenue collections have been deferred, but this may lead to delays in filing taxes later on. Keep clear records and provide full tax services even amid COVID-19 to prevent the loss of financial data.
You can also help them renegotiate payment terms with suppliers and debtors. Construct offers like discounts for early payment or concessions for businesses that are unable to make loan payments. In certain situations, you may have to give advice on debt reorganization for insolvent companies; this is a better outcome than full liquidation.
4. Assist in medium-term planning
Though small businesses may currently be in survival mode, you can help prevent further collapse by helping them plan for the medium term. Help your clients figure out how to make the business viable without laying off employees. Retrenchment should be a last resort, and you must help clients access alternatives.
For example, employees may be willing to take temporary pay cuts instead of suffering redundancy. This will help the business pull through this time and prepare for a possible new peak in COVID-19 infections when restrictions are eased.
The importance for our small businesses
The coronavirus pandemic has turned business upside down. This is a critical moment in global economic history and everyone’s efforts certainly matter in keeping things going.
For tailored CFO services in Boston, MA, get in touch with our accountants at A4E today.