Technology Industry CFOs Discuss the New Normal of Managing Their Businesses Since the Outbreak of COVID-19
March 28, 2020
By Alan Wink
One would think that technology companies would have an easier time adapting to the mandatory work from home and virtual meetings now common in the COVID-19 business world. It seems that CFOs of companies of all sizes are now working literally around the clock to ensure that their companies remain as going concerns.
The EisnerAmper Technology Group recently hosted a virtual meeting of nearly 15 technology company CFOs to discuss the business, financial, accounting, tax, and organizational issues they are confronting as a result of COVID-19.
CFO responses focused on short-term priorities of the next 30-60 days. Participants on the call were involved in a wide array of tech businesses including cloud migration; telehealth; tech-enabled software and telecommunications. As you might imagine, some of these businesses are really thriving during these extraordinary times.
Summary of Key CFO Points
Employee Reduction, Retention, Engagement
All CFOs agreed that layoffs were the last resort. Yet some have also planned for worst case scenarios, even prioritizing employees and planning for back filling positions as necessary. Most focused on employee retention and some are even hiring. It is critical to keep employees engaged and involved in their daily work functions even though most are working remotely. Conferencing packages such as Webex and Zoom have become powerful tools to facilitate virtual meetings. Some companies are even requiring their employees to have their cameras on during virtual meetings. People are now working alone more than ever, so being able to see someone else’s face every so often is a good thing. Communication is such an important part of every organization and companies are now requiring team leaders to be checking in on their team members, if not daily, then three or four times a week. To foster a sense of team, many companies have embraced the concept of virtual “happy hours” for their employees. These are BYOB of course.
Even though several of the participants on the call had recently closed new funding rounds, cash conservation was certainly on everyone’s mind. Many of the companies had already had meetings with their lenders or were about to schedule such meetings. Companies are taking a close look at their liquidity, trying to see how long they can operate without new sales or cutting costs. Cash forecasts are being revised almost daily and companies that have the ability are drawing down their credit lines to shore up their balance sheets. As part of the cash forecasting exercise, many are evaluating which of their customers is at risk from an accounts receivable standpoint.
Even for well-capitalized tech companies, new hires have literally been put on hold. There are exceptions for mission critical hires. Companies are trying to keep work scheduled as is, so that present employees could be best utilized.
Contingency Plans for Key Employees
Many companies are developing contingency plans for their key employees in the event that they are stricken with COVID-19. To keep the business running smoothly, every possible key employee scenario must be evaluated.
Real Estate – Leases
Many CFOs are attempting to go to their landlords and negotiate better terms or even free rent for a short period of time. Most landlords understand how difficult it would be to replace tenants during the COVID-19 pandemic and they are certainly trying to work with their tenants. Some landlords are willing to defer rent for a limited number of months and then just extend the lease for that period of time.
Banks and Investors
Nearly all CFOs on the call have held discussions with lenders and investors regarding short term needs and contingencies. Some noted that, similar to businesses, banks are focused on credit risk, customer retention and customer prioritization.
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