beat the covid crisis with these 20 steps for your firm and your clients

the ultimate checklist for focusing on cash, communication, continuity – and accepting uncertainty.

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the toll of covid-19 on business will be an ongoing trauma. it ain’t gonna be over ’til it’s over, and that ain’t gonna be for a long, long time.

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to survive, tax and accounting practices are going to need to take precautionary and proactive measures to ensure their financial continuity. those measures must necessarily include guidance for clients to help them survive. because failing clients mean failing firms.

crisis management is a lot easier if it starts before the crisis hits. here are some steps that accountants can take for themselves and their clients, gleaned from the thousands of accountants and advisors we’ve been hearing from over the past several weeks.

protect cash flow

virtually every business organization is going to suffer a precipitous drop in revenue, and in many cases, expenses are going to increase. firms and clients need to:

1. redouble efforts to collect what’s owed. this might take some creative negotiation, but it can’t be left to follow a natural course.
2. organize and prioritize sources of credit.
3. identify potential opportunities to raise capital, such as joint ventures, divestitures, and sales of assets (shares, inventory, properties, etc.)
4. reassess and prioritize spending to identify what can be avoided or reduced. implement zero-based budgeting.
5. establish systems for tracking liquidity in real-time.
6. match tax strategies, extensions, and quarterly payments to this year’s, not last year’s, reality.

forecast the future

the more uncertain the future the more important to predict it. firms and clients need to:

1. imagine—in detail—every likely scenario regarding the pandemic itself. what happens if it subsides in your area but not elsewhere, or vice versa? what happens if it remains unabated for another year? what if the firm or company suffers major or minor infection?
2. outline possible responses to each scenario, considering everything from cash flow to alternate services and products.
3. imagine the most likely business scenarios—the radical drop in clients or customers, the shortages of raw materials and outside services, the legal lockdowns, the return to some kind of normal, and others.
4. define trigger points that will require shifts in strategy.
5. monitor conditions that can lead to trigger points.
6. establish plans for reviewing scenarios in accordance with current developments.

communicate, communicate, communicate

during uncertain times, everyone wants more information. crisis management is no time to leave people wondering what management is doing and the reasons behind decisions.

1. internally, cpa firms need to ensure that employees understand current and future changes and why they are or will be necessary.
2. firm management needs to listen to employees to identify problems with everything from technology to morale.
3. cpa firms need to advise and listen to their clients. clients need guidance now, not just after the fiscal year. cpas need to understand their problems.
4. investors need to know what’s going on. false cheeriness and lack of transparency will only lead to uncertainty and its consequences. a client’s investors may want to know what the company’s cpa firm is doing to help.

keep business going

lockdowns, unemployment, bankruptcies, illnesses—obviously these are to be avoided, but when they happen, how can firms and companies make the best of them?

1. look for ways to sustain productivity at your firm and your client’s companies. crises in other firms and businesses may decrease competition. or maybe this is a time to ensure future productivity by doing maintenance, improvement, training, and reorganization.
2. look for opportunities for new kinds of services or products. a changing world changes its demands.
3. reassess the balance sheet: review goodwill impairment. refinance debt. revaluate inventory. deal with accounts receivable. reconsider capital allocations. adjust investments for better opportunities and cash flow requirements.
4. help clients overhaul tax and financial strategies to meet current and potential scenarios.

these steps, applied internally, will help cpa firms steady their own positions to remain sustainable over the long term.

posted on may 24, 2020