If you’d asked an accountant in January what their biggest challenges would be in 2020, you would have received a different answer than today. Things like technology, clients choosing to DIY their accounts rather than using an accountant and talent acquisition and retention are no longer a priority. Now they are contending with the fallout from COVID-19 and the significant impact it is having on their clients and their own accountancy practices.
Survival is as much about the ability to recover once the effect of the virus lessens as dealing with what is happening now. It’s not the time for making hasty decisions, rather identifying the more pressing challenges and managing them.
Managing cash flow
Like other organisations, some accountants may see a fall in income and experience cash-flow problems. They will need to review their cash-flow forecast to identify any gaps. Depending on the results, they may need to source Government financial support or funding, for example, the Coronavirus Business Interruption Loan Scheme.
They should also speak to their banks and revise their borrowing and overdraft facilities. Reviewing and cutting business costs is another option. Reduce non-essential expenses and manage fixed costs such as rent the best they can.
An increase in non-revenue generating work
Accountancy practices are likely to receive requests for short-term guidance during the pandemic. A lot of this work won’t generate revenue but needs to be prioritised so that clients can keep trading. The Government has also deferred some tax payments, so income-generating work in this area is on hold. Practices may need to consider diversifying and offering other value-added services if they don’t already do so.
Most businesses have some home-working capabilities in place, but few work entirely remotely. Accountants will need to ensure staff have the right IT equipment, suitable broadband and remote access to the information they need to do their jobs.
They will also be managing their team remotely, paying close attention to employees’ health and wellbeing. Managers will need to set aside more time to communicate with staff and deal with their concerns. They will need new guidelines for virtual meetings and using messaging tools to minimise miscommunication. Firms must introduce more flexible working hours and practices to accommodate employees who are looking after their children at home.
Helping clients through the pandemic
Perhaps the biggest challenge for accountants is how they help their clients through this period of uncertainty. Even the best business continuity plan will be severely tested as businesses have never had to face the scenario they now find themselves in. There are multiple factors for accountants to consider when supporting their clients:
- volatility and erosion of financial markets
- declining credit options
- liquidity concerns
- government intervention
- increased unemployment
- changes in consumer spending
- layoffs, furloughs and other restructuring activities
- increased inventory levels as businesses can’t distribute stock
- reductions in production because of decreased demand and lack of workforce
All clients will need different help to tackle the challenges they face. Accountants can provide support by:
Communicating more regularly: accountants may need to speak to their clients more frequently to offer advice and reassurance. Conversations are likely to be more emotional than usual. An accountant can provide clarity and an objective viewpoint to support the client.
Providing information: accountants will need to fill the gap in their clients’ knowledge around emergency coronavirus legislation and business support such as the Job Retention Scheme.
Advising on where to get financial support: accountants will need to be up to speed on Government guidance about financial assistance. They can then advise their clients on the type of support available and how to access it. Accountants may need to help their clients fill in loan and grant applications or provide financial information to include in the applications.
Accountants should keep up to date on the support banks are offering their customers and advise their clients on their options, such as mortgage repayment holidays. They may have to interpret changes in terms and conditions and explain their implications.
Looking to the future
No one knows what the world will look like once the pandemic is over, which makes planning for the future very difficult. However, like other businesses, accountants must try to envisage what the business landscape looks like and how they will navigate it.
Remote working will likely become more prominent. Accountants will have to change their business models to incorporate permanent remote working. They may also have to invest in more robust business tools such as high-speed broadband connections and VoIPs to support home working.
There may be new laws and regulations for accountants to analyse and apply. Many businesses are operating using Government funding so they will come under more scrutiny. Workplace health and safety legislation may become more stringent, and current processes and procedures amended to reflect the changes.
Some accountancy practices may sustain serious damage and must work to regain their pre-coronavirus position. Not only will they be trying to repair the damage, but they will also need to make their businesses more resilient at the same time. Others will respond to the unique demands of the pandemic and come out stronger.