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5 tips for Finance and Accounting Professionals at SMBs to handle COVID-19 challenges

April 7, 2020

The spread of COVID-19 and its repercussions on pretty much every aspect of life continue to shock us all. Small and Medium Businesses, especially those who obsess about planning and forecasting, find it extremely challenging keeping up with such best practice when the narrative and data are changing every day. Ironically, all this is happening at a time when planning and forecasting are probably the most crucial activity within a company.
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Plan for the worst and hope for the best: 5 COVID-19 maneuvering tips for SMBs

In this piece, we will offer finance and accounting professionals at SMBs 5 tips that we believe can alleviate some pains resulting from such a challenge.

1. Turn off news notifications

The noise can be a major distraction especially since the virus is affecting everything and everyone around us. Couple that with living in an era of instant news and fast shared content. It becomes ever more important to prioritize and allocate time.

One framework that works in good and bad times is the Eisenhower Urgent/Important Principle or Matrix. What is unique here is that news could have a direct affect on your business (clients, employees, govt stimulus for businesses etc.). Still, this shouldn’t stop you from allocating time (e.g. check the news in the early and late hours).

2. Follow a framework and stick to it

Forecast extreme downside scenarios. In other words, plan for the worst and hope for the best. Sounds reasonable, but how do you execute on that? It is critical that you put forth a framework and update it regularly. It could be as simple as a checklist that you follow to ensure you are ticking all the boxes at the right time (example one which is holistic and example two which is more focused on financial forecasting).

Remember that the act of planning is often more important than the plan itself as it helps everyone coordinate better and stay focused on common goals. The frequency of updating is crucial here because how quickly you respond can determine if you come out of this alive or not as a business (we recommend weekly in case you have an FP&A Manager or monthly if you have limited resources)

3. Your cash is king

This is the right time to look back at your vendors list. Look at your last 3-month P&L and cash flow, segment your cash outputs into large, medium, small vs. business critical and good to have’s and start restructuring. Be proactive about it so you don’t burn bridges with your vendors: ask for extended payment terms, discounts etc. and try to delay payment as much as you can either way. You will be surprised how many will continue to offer their service, especially during times like these when lack of empathy is frowned upon. If your AP is managed externally by your bookkeeper get them to help you by analyzing and making recommendations on what should be paid and when.

When it comes to inputs, look for other sources of cash (e.g. government initiatives, your financial institution, equity partners, grants, etc.) If you have a solid handle on your cash (and you should) and see it on the brink of extinction, then I recommend you even build a 13-week cashflow model that takes both inputs and outputs into account.

4. Finance beyond numbers

Everyone involved in the company’s finances needs to step up: the external bookkeeper, internal finance team, auditor, bank/lender, tax advisor, VC etc. For example, I have found Deloitte’s frequent papers, webcasts and COVID-19 section on their website to be a great resource. Their advice is now available to everyone and not just reserved for clients. You then ought to dissipate that knowledge across the organization so other teams are informed and prepared.

The way you communicate, the messages you deliver and the speed of such delivery are critical here and get the whole organization trusting that the company’s financials are in good hands. Yes, suddenly everyone is waiting to hear from Finance. Leverage that position to earn and instill trust.

5. Swim the extra mile in the deep end

That disaster and recovery plan that you thought you will never use is now put to test. Remember that there is always opportunity in chaos. You thought you can never operate working from home? Maybe you never fully leveraged Zoom, Slack or Miro. Or that you can only get payments made through paper invoices and cheques? Maybe this is the time to make use of tools like Receipt Bank and Plooto.

You are already in a high-risk territory, why not leverage your position to try new and safe methods that might in fact streamline the finance function and overall operations even in calmer times? At least now you can quicken - if not skip altogether - internal bureaucracies and approval processes given what is at stake and the cost of inaction is larger than the cost of action.

These are excruciating times for businesses and finance leaders. We hope the above tips help in daily decision making and ultimately in getting your ship to a safe harbour.

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