Working through the Pandemic

Over the course of the last two days I participated in a virtual conference which usually would have taken place in person, meeting up with fellow accountants, but due to the current pandemic of COVID-19 the conference was held virtually via laptops in home offices. This time away from the usual day to day allowed me to reflect on the year since the last conference, assessing achievements and areas of improvements but also the impact of the pandemic and what the future might look like.

Many changes are being forced upon us in dealing with the current situation. Staff are working remotely using kitchen worktops as their place of work, communications with team members by video calling rather than a chat over a coffee, co-ordination of projects by telephone rather than in person and many other internal and external challenges to business operations. Businesses holding cash where possible due to the uncertainty of short term future, which will lead to lack of investment in projects , staff, technology and growth. Does not look bright for the future, does it?

Whilst the impact does not look good I am sure the worst is yet to come when the government start to recoup the funding provided during 2020 to keep things ticking over, not to mention the potential impact of Brexit, if the "B" word is not banned from blogs as I type.

How do we best plan for the unknown?

In this scenario who knows how long this is going to last, but businesses may benefit from going back to basics until a more certain world is in sight. Control of core activities and cost is key.

How can Management Accountants help businesses at this time?

It is my opinion that management accounting is key to any COVID-19 Business Recovery plan due to the fact that management accounts will usually highlight the key workstreams, cost behaviours and underlying performance for operations. With focus in the commercial activities you can see areas of a business that are not performing and analyse the reasons why, is it due to supply chain constraints or resources etc.? Once a business has this level of information then key decisions can be taken on resolving issues or removing operations.

As a plan for recovery the accountants can support with analysis of overhead spend and the impact to overall profit. It could be for some businesses that if failing workstreams were to be removed from operations that the overhead may also require trimming down due to lack of resource requirements.

Technology could be used via apps or add-on's to accounting systems to allow for some of the tasks to be completed remotely that may have been carried out by an office member which would allow that resource to focus on other tasks or a cost saving by removing the role from the structure, an example could be timesheets for a project through an application that could be completed on mobile devices and reviewed by managers before being approved and posted at the click of a button.

Another area where management accountants can support a business in this period would be on the management of working capital and cash flow. In a time where businesses are holding on to cash and paying suppliers when absolutely required to do so, a business needs to be aware of the cash impact on operations and the areas where cash is being pulled from the business. Lots of areas to look at in this section, it could be own working capital is too stretched for the current workload or debtors not chased quickly enough for settlement of sales invoices but also could be that deferred payments from earlier 2020 lockdown are now catching up with the business. Once it is understood where the cash inflow / outflow bottlenecks might be, either now or in the future, decisions can then be made to rectify and plan for future activities.

The main area of the recovery plan that is bread and butter for us management accountants would be the looking forward and risk based approach forecasting, which allows for a clearer picture of what the future may look like over a period of time. The forecast will be based on various activities and may be created for different scenarios to provide confidence in decisions made now and the impact those decisions may have in the future.

A biased view as a management accountant, yes absolutely, but the message here is not about how great we are but about the tools and techniques we use could seriously help some businesses through this crisis to the other side.....when and wherever that may be.