The Coronavirus has been causing damage to the global economy since early this year and it is still unclear when will this end. Nations across the globe have been responding to this health threat through lockdowns which limited the movements of everybody.
This measure affected the trade and sales of every business unit regardless of the size.
For small businesses, this is a tougher situation. The uncertainty increases the complexity of formulating a concise business continuity plan to save their startups.
Accounting for small businesses are two of the essential tasks you might want to focus on during these times. These will contribute to better business decisions and financial planning that will help you thrive through this crisis.
Business Continuity and Accounting Tips During COVID-19 Pandemic
There are a few things you might want to add to your business continuity plan checklist as well as some accounting tips you need to consider.
Make Sure to Update Your Books
When it comes to accounting and finance, bookkeeping is a must.
Unfortunately, even if you temporarily closed your business and operations, your expenses won’t stop.
During a crisis like this, it is just necessary to continue with ensuring your books are accurate and updated to get a clear view of your finances.
By maintaining your bookkeeping tasks, you will have data you can rely on when you make business decisions. Your books will also assure you that you have enough working capital to get you through the next few months.
Additionally, you still have legal responsibilities and payables to the government and several banks.
Collect Your Cash
In a situation like this, cash is important. You must continue your invoicing and collections. For a more timely payment, bill your clients when the service occurs instead of waiting to bill your clients at month-end or later.
If you need help with your accounts receivable, invoicing, and collection, you can use several accounting tools that can help you automate and ease the work.
Regularly Check Your Cash Flow Forecast
During a crisis that directly affects your small business, you must prepare yourself for the worst-case scenario. You need a business continuity plan for the next few months.
It is recommended to conduct a sensitivity analysis. This will help you understand how your small business would operate and adapt to different scenarios. Aside from plans to continue business operations, you also need to adjust your short-term cash flow forecast and budget accordingly. This is the fund you will be dealing with in an uncertain period so manage it properly.
If financing is necessary, banks and government agencies have several funding measures for businesses affected by this pandemic.
Properly Manage Your Expenses
After you have already settled on your bookkeeping and cash flow, you’ll know what you need to stay afloat. From here, you want to look at current and upcoming expenses so you will have an idea of where to adjust.
Avoid taking a business-as-usual approach for expenses during this time. Remember that your goal is to minimize non-essential spendings, renovations, new hire, or new website.
Therefore, you should create an updated budget and communicate with your team regarding the changes.
After listing down what are your essential spends, look at your vendor contracts to see if there are opportunities to renegotiate payment terms.
These trying times call for change so when you are invoiced, pay under payment terms. Do not go beyond the terms because it might cause another problem when managing your accounting and finances. This new measure will help with your cash management.
Take Care of Your Employees
Mental health risks are truly high during these troubling times. It’s important that your employees feel supported and safe, therefore, when things do go back to normal, they will be more motivated and more committed employees. Something that can be beneficial to your business when you continue your recovery.
Whether you’re closed and paying staff or have implemented remote working, make sure to keep communication lines open. Be creative with connecting through tons of available technology.
There are several free tools online some like FaceTime, Google Hangouts, and Zoom that can temporarily aid the actual office environment. To maintain the good working set-up, keep meetings as scheduled, continue email updates, and make sure there is still a line between work and personal life.
Consider Outsourcing Accounting Services
It is not surprising if you laid off some of your employees during these times. It is a financial burden for a company to continue paying people even though there is no generation of cash.
But despite this loss, you and your business must continue to thrive. You must continue the usual tasks your employees are doing to keep your operations going.
Let’s face it, you cannot do everything, therefore, you might want to consider outsourcing. Aside from the tools, you can source online, there are outsourcing agencies that can help you. This is a more cost-effective way to get the same quality of service for several tasks.
Outsourcing your accounting and finance-related tasks will give you more time to focus on planning and seeking other ways to survive.
This pandemic has changed the lives of many people. It forced entrepreneurs, company owners, and other people from every industry to adapt and realign their plans. Unfortunately, as the virus continues to spread, it also increases the risks and damages it already created. You as a business owner must still be optimistic and prepare your business continuity plan amidst the uncertainty.
Moreover, the good things during this troubled time are seeing how people and businesses are coming together as a community. People are being kinder and more understanding with one another. Businesses supporting each other.
This was not the first economic crisis the world has faced and hopefully soon, it will also result in something good.