The global outbreak of COVID-19 continues to grow and strike the economies causing the unprecedented crisis. As the pandemic surges in both magnitude and duration, the global financial systems have already felt a dramatic impact associated with the general economic downturn, apart from effects on results of operations, liquidity crisis, going concern issues and capital resources. These are triggering the economies towards recession and disrupted the global supply chain while decreasing consumer confidence, consumer spending levels, trade, productivity etc. Businesses with accounting professionals must prudently assess their business position and risk exposures and strategically design solutions to keep their financial reporting still afloat.
Should these circumstances continue to intensify and result in an even broader and substantial downturn, a prolonged negative impact on the business’ financial results is potentially expected.
Is “Virtual Work” the New Normal?
In the midst of this pandemic, the term “new normal” has gained an audience and already become overused. It is a term that applies to every implication of social distancing in our culture. People in nature are flexible and adaptive, but also, people do not acknowledge the sudden and massive change. People like to eat together, discuss things over food; we love parties and enjoy live entertainment. This goes with company luncheons and dinners and company events and parties – which over time will slowly get back to old patterns once this pandemic is over.
However, this would not be the case for virtual meetings. With the pandemic, the general population and finance professionals have massively accelerated the adoption and improvement of that technology.
Work from home scheme has been a new practice that most of us are little by little adapting ourselves into. A certain spot or corner of the house has suddenly turned into our office, catching up with colleagues and business meetings have moved to virtual platforms. Things have changed in the past few months to cope with the pandemic. Everyone is forced to adapt. General realization is that business processes and systems should be set up elastically to easily adapt to changes as a crisis like COVID-19 pandemic could hit anytime.
The Crisis in Talent
Advisory services are always needed to bring strategy and opportunity together to improve business performance and help individuals better plan for their current and future financial needs, especially during this time of the pandemic. The pandemic has proven the CPA’s high worth their added value services with forward-thinking individuals understand the need to embrace a big picture mentality.
Managing talent in times of uncertainty surrounding the current economic crisis poses some issues revolving around unpredictability and fear of the unknown. The pandemic has notably redefined work culture, making professionals re-evaluate their functions and working processes.
Business owners and leaders should simultaneously manage their talent priorities while ensuring business continuity. Managing talents here cover a much wider scope – from attracting, retaining, motivating, skilling and developing of employees to a much greater human connotation; ensuring employees and families are safe. With the scale and pace of the pandemic, businesses must act very smart and swift.
New Opportunities for Growth
The current pandemic has greatly disrupted our world. As evidenced by history, gigantic disruption is always followed by massive opportunities. It may seem ironic and contradicting to think about growth with the economy declining, but there are evolving opportunities that arise when properly identified and recognised can steer a business towards a turnaround position.
Losses are unavoidable, they must be minimised while capitalizing on opportunities. Opportunities do not mean pricing at higher markups and taking advantage of the situation – thus hurting your clients even more. It only means making strategic decisions that will emerge your business stronger and victorious at the end of this crisis. It’s critically important to make data-driven decisions and evaluate the outcomes of your decisions based on insight and analytics.
Many cities are still in lockdown or slowly coming out of the lockdown period hence are scared to move freely and out of their homes. This paves the way for e-commerce businesses – the future of e-commerce looks bright and promising! Due to movement restrictions across the globe, products and services will need to be delivered. The demand for online shopping has increased significantly which has led e-commerce companies to add more jobs and increase capacities to manage the surge in demand. Also, people will be searching for updates, answers, and ways to improve their personal and professional life. Take your business to a solid digital marketing strategy and surely you will weather the storm.
The 3 Cs = Cash, Collections & Capital
As businesses sail the pandemic, hard-pressing issues are surfacing around planning cash flows, billing and collecting from clients and making sure the business has the capital resources it needs for business continuity.
Businesses struggling for profitability and liquidity are particularly vulnerable. Thus, cash flow management is essential in a company’s overall COVID-19 risk assessment and action planning in the near term.
Even for companies that have not yet been adversely affected, it is recommended to actively assess cash flow requirements, design actions for each possible scenarios and assess potential risks in their customer and supplier network.
Manage and expedite receivables – it’s worth taking a hard second look at how your receivables are being managed – optimising collections and limiting bad debt losses. It is also notably tasked to reviewing accounts on client-specific payment performance and identifying clients that may be changing their payment practices for low, mid and high-risk clients. Also, timely and accurate invoicing are is very important as errors may entail costly delays.
Revisit capital resources and investment plans – consider what’s really necessary for the near term. Set your order of priorities – which investments can be postponed and which investments should be reconsidered and which investment is required to position the company for competitive advantage.
CRESCO Accounting is a chartered firm providing various accounting services for different industries. The team composed of Certified Public Accountants that continuously working together in streamlining business operations and advises clients on business strategies. They are dedicated to helping companies, whether small or big, SMEs, individual business owners as well as large subsidiaries. The company’s services are designed based on the goal of providing proficient and cost-effective accounting solutions to offshore and onshore clientele while guiding and helping them achieve their full business potential.