Last updated on August 31st, 2021 at 10:53 am
COVID-19 has impacted many industries. Companies of all sizes were forced to deal with economic and health challenges unlike before. Millions of Americans have submitted unemployment claims, with rates reaching all-time highs. Companies focused on crisis management, workforce reduction problems, navigating virtual work environments, new relief legislation, and the business’s financial health and survival in the face of the pandemic.
Other companies saw an exponential increase in demand, especially essential businesses, and struggled to keep up. While American’s struggled to pay their mortgages, businesses struggled with new problems they hadn’t yet faced. While most businesses are no stranger to financial problems like debt, no one was prepared for what a pandemic could do to their accounting and finances.
The financial industry is just one of many that has had to change its operations since the beginning of the pandemic, but it’s one that was hit hard. Here are just some of the things that COVID-19 changed about accounting and finances.
Businesses have always known the importance of communication, but that can be difficult when you and your employees, customers, and partners are all dealing with challenging situations. When it comes to your customers, the tone is important so that you can view events from their perspective.
For employees, you’ll need to communicate effectively so that you can give them updates about staffing when they don’t know where they stand. For example, many employees don’t know the difference between layoffs and furloughs. A furlough means that the employers continue to pay certain benefits and maintain an employment relationship, while a layoff means that employees have been let go without doing anything wrong.
When it comes to your partners, you’ll also need clear communication for business continuity and the ability to solve financial problems when they arise. Consider your relationship with your lender. COVID-19 has taught us all that having a good relationship with successful communication with a bank or lender can help us through tough financial times.
While many workplaces had already started implementing a remote workforce, others weren’t prepared. With the use of professional tax software, many businesses were able to ensure that key financial and business processes were operational virtually.
The most critical component of going virtual for accounting is accessibility. Companies easily moved their systems to the cloud, eliminating the need for on-site access and ensuring access to financial data such as expense reports.
Going virtual has ensured that businesses and their accounting departments and teams have access to cash and information from anywhere in the world. Additionally, moving payroll and accounts payable away from paper checks toward digital payment systems can ensure that employees and partners are paid on time no matter what.
Financial processes have failed during the pandemic when they were reliant on manual tasks, like those that required collaboration between teams on-premise and data being stored on-premise without a remote way to access it. That’s why with cloud-powered automation tools you can fully automate processes like accounts payable and receivable. On top of that, automation brings a huge security boost and makes AP processes fraud-free.
It’s also necessary to plan and forecast insights for cash flow, which places additional pressure on financial teams when it’s difficult enough for a business to survive during a pandemic. Without automation and the right software, accounting and finance teams will struggle to give the business information about the future that’s necessary to plan.
While CPA firms have all had to deal with the same stressors and difficulties as any other business, some challenges are specific to the field. Here’s the new normal for Accounting and Finance Firms.
While your firm may have had a one-size-fits-all process when it came to your clients, you’ll find that all of your clients now have different needs as their business and industry struggle to make ends meet during the pandemic.
As your client’s needs change, it’s important to be flexible and look for new ways to provide services without using additional resources to set up new departments and hire new staff members. Instead of spending money without revenue, firms can reorganize their staff and services in more unique ways.
Some accounting firms have established areas of the business designed for chief financial officers to provide support to CFOs and financial executives that these individuals can’t take on themselves. Giving clients a new line of service can provide them with access to specific skills for projects without having to take on the cost of additional bookkeepers and accountants.
Tailored services can take away time-consuming tasks from a CFO, including strategic planning, budgeting, forecasting, and more so that they can focus on the financial future of the business during the pandemic.
Not only that, but CPA firms must remain flexible when it comes to their clients because of the relief programs provided by the federal government. These programs were designed to help businesses remain operational and pay their employees during difficult times. CPA firms can help guide their clients through complex loan programs so that they can stay in business.
Whether your CPA firm focuses on personal taxes, business taxes, or both, you can expect more business in the next few tax seasons because of all the changes to your client’s financial lives.
Individuals may choose to enlist your services to help them receive stimulus checks that were never mailed to them, while businesses will need your help all year long to navigate loans and new financial processes.
Individuals who may never have used accountants or tax experts before will be looking for help navigating unemployment benefit taxes, loans, and more that they never had to deal with before the pandemic.
Whether you’re a CPA, CFO, bookkeeper, or business owner, your business depends on your accounting process and finances. The pandemic has made financial concerns more confusing, especially because changes happened so quickly. The key to ensuring your business’s survival is to take what you’ve learned from the pandemic and apply it in the future. We don’t know when, if ever, the state of finances will return to normal, so always make sure that you are flexible and prepared.
Jacob Dayan graduated with a Bachelor’s in Business Administration from the University of Michigan’s Ross School of Business. He began his career as a financial analyst at Bear Stearns’ industry leading Financial Analytics and Structured Transactions group. In 2010, he co-founded Community Tax LLC, a tax company dedicated to helping customers nationwide with tax resolution, tax preparation, bookkeeping and accounting services. As CEO of Community Tax, Jacob Dayan has assembled a strong team of attorney practitioners, CPAs and enrolled agents to deliver superior customer service and expected results.