How to Pivot Your Accounting Operations: Coping with COVID-19
March 12, 2020
By John Delalio
The rapid spread of the coronavirus through the world is clearly having an impact on the economy and general business environment within the U.S. For most businesses, the crisis has led, or will likely lead to at least a temporary decline in revenues – so companies that do not react to this situation will undoubtedly put themselves at risk.
Wherever there is change, there is opportunity. Clearly there are revenue opportunities for certain existing or new goods and services based on the impact of COVID-19 (i.e., hand sanitizer). However, there are also opportunities from an operations perspective. One of the advantages to a decrease in business activity is companies have time to fix those areas that never get attention, and that very well may be your back office accounting. Here are four accounting pivots that may help a company emerge for this crisis stronger and better than before.
Get your accounting into the cloud
To be blunt, in the year 2020 there are very few reasons why any small to mid-sized company or organization should be running their accounting software on desktop or server-based software. Applications such as Xero, QuickBooks Online, Intacct, and others provide full accounting software functionality in a secure environment without any of the hassles of maintaining software or provisioning remote access. To give a user secure access, you simply set up a user ID using their email address, and set their security access level. That is it. There is no VPN connection or remote desktop to be configured. There is no software that needs to be installed on anyone’s PC. There is no large data file that needs to be emailed or securely transferred to an external party, such as an accountant. Any user from anywhere in the world can be given access with only an email address. These systems also have optional two-factor authentication for added security if required.
With the coronavirus situation, many companies have decided to let their employees work from home to avoid person-to-person contact. For accounting staff using desktop software, this is very hard to do. And think about your IT staff -- do they need to be physically in the office to support that accountant. With cloud-based software, allowing accounting staff to work from home or switching work to subcontractors working remotely will have minimal impact on accounting operations.
Automate your work processes and eliminate paper
One of the advantages to using cloud-based accounting systems is they can be linked together in the cloud, thereby eliminating the need for data to travel between systems via paper mail. The previously mentioned applications Xero, QuickBooks online, and Intacct, all have electronic interfaces to banking systems. This eliminates the need to reconcile paper-based banking statements. Furthermore, these applications all connect seamlessly to other specialized applications, such as Bill.com and Expensify. These apps utilize artificial intelligence technology to load invoices and expense receipts from PDFs and photographs. They also allow a company to pay vendors and employees electronically. For example, a vendor can email an invoice directly into Bill.com. The invoice is scanned, loaded, and categorized automatically. It then goes through an electronic approval process where it can be approved from a smart phone or any device with a web browser. The invoice is then paid either by EFT or by check, which is physically mailed by Bill.com.
The Bill.com process described above is a great alternate work path and will help minimize exposure to Coronavirus. There is no paper invoice to be opened, handled, and key punched into a computer. There is no paper-based approval document to be handled by staff. There is no check to be written, envelope to be licked, or mail carrier to be in contact with. However the bigger and more permanent positive impact is: Bill.com eliminates work through automation allowing you and your staff to be more efficient.
Outsource your accounting
With your accounting systems in the cloud, outsourcing some or all of your accounting operations becomes a great way to eliminate costs, decrease risk, and free up time for you to focus on your business. As accounting software has moved to the cloud, a whole ecosystem of cloud-based outsourced accounting options have evolved. Accounting firms are leveraging the same benefits described above to create cloud accounting services. These providers are technical experts with the knowhow to keep the systems running smoothly in an integrated fashion. One such service is cloud bookkeeping where a provider can easily maintain your records remotely at a fraction of the cost of hiring someone onsite. Another more complete option is a full cloud accounting solution, where you’ll not only have basic bookkeeping, but also a full-service team including CPAs and CFOs. These resources not only make sure your business is properly accounted for, but also provide advice and guidance that is relevant to your industry and your stage of business growth.
Clearly in light of the coronavirus, an outsourced cloud accounting services has a significant amount of benefits. By their very nature, these solutions are designed to provide services remotely. With remote access to software and data, combined with communications through email, text, telephone, and video conferencing, you will have access to a virtual accounting team that is available anywhere and anytime. Additionally, because these providers deploy teams, not individuals, and because they already leverage a work from anywhere model, their operations have a very low risk of being impacted by the coronavirus. But beyond current circumstance, there is another sizable benefit to adopting a cloud accounting service: Imagine the freedom to focus on actually running your business, confident that the books are right, you have instantaneous access to all your financials, and you have a team of experts behind you to help make sound, logical financial decisions.
Use the break to make your business appealing for investment
Unfortunately one of the downsides to the coronavirus is a slowing of business in general as well as a slowing of investment in business. There is no doubt that volume of transactions and revenues for most companies are down, and some investors are pulling back or delaying investment transactions. Raising debt will also be difficult, particularly for those organizations that need an infusion of working capital to weather the crisis. These facts are all part of a normal down business cycle triggered by the outbreak or any other crisis.
However -- demand for investment might be delayed or stalled, but there is still a tremendous amount of wealth in the economy looking for growth opportunities, both equity and debt. As the economy turns around, there will be great opportunities for a well-run businesses. Therefore, now might be a great time to use this break to clean up your business. First, make sure your current operations are as efficient as possible. This action is a necessary step anyway to maintain profit with decreasing revenue. Second, clean up your historical financial data now. If an investment opportunities arises, don’t let it slip through your fingers because you need time to clean up your books. Third, connect yourself with experts who understand your industry, your business, and the investment ecosystem. Let them focus on the accounting, so you can focus on the life blood of your business which is marketing, sales, and innovation.
This content is intended to provide general information to our clients and friends, and in no way represents an endorsement or recommendation of any product or service mentioned. This content does not constitute accounting, tax, or legal advice, nor is it intended to convey a thorough treatment of the subject matter.