As healthcare workers fight the medical battle against COVID-19, accountants and bookkeepers take their place on the financial frontlines. For many small businesses, what happens in the coming weeks and months could make the difference between survival or insolvency.
Small businesses around the country are rightly stressed and in need of much reassurance and guidance. In recent research we commissioned with YouGov, one in four small businesses said they either won’t be taking any action in response to COVID-19 or still don’t know what action to take at all.
This uncertainty provides an opportunity for advisors to deepen their relationship with small businesses looking for direction. In fact, with further Intuit QuickBooks research showed small businesses with trusted advisors are 89 per cent more successful, investing in this relationship will pay dividends for both small businesses and their advisors, both today and beyond this pandemic.
But let’s be honest, any accountant called upon to help will also be feeling increased pressure. The consequences of decisions taken right now will be huge.
A helping hand for a helping hand
To help you efficiently guide your clients through these challenging times, Intuit QuickBooks created a Cash Flow Continuity Playbook. It’s designed to make it easier for any accountant or bookkeeper to quickly assess their clients’ cash situation and help them achieve and maintain positive cash flow.
Stepping in to support business owners with an assessment of their vulnerabilities is a vital first step to determining whether they are affected, to what degree, and what steps they should take next.
The playbook was created with input and insights from Australian accountants and bookkeepers who are facing these issues every day. It combines a few top tips with simple and practical tools to help you implement them.
As Kane Munro, Director of Accountancy Online put it: “Even the most profitable businesses can be undone by poor cashflow. If you don’t have enough money to pay your staff, suppliers or to buy product or materials you’re going to fail. Advisors need to understand this and take a leading role in understanding what causes cashflow problems in their clients.
“The Cashflow Continuity Playbook breaks down the common cashflow issues and spells out how to improve business cashflow in an easy-to-understand guide, with tops that give businesses the best chance to survive and thrive during these times of uncertainty.”
A few takeaways to get started:
- Identify and prioritise worst-affected clients.
Accommodation and food services, along with arts and recreation are some of the hardest hit. The automotive sector has also taken a major dive, with car sales plunging almost 50 per cent, leaving dealers reeling.
- Generate a cash flow forecast
A cash flow forecast allows you to determine how long your client can keep operating, based on usual patterns of expenses, to help you evaluate “what-if” scenarios, based on potential adjustments to revenue and expenses.
Before you start, make sure all transactions are reconciled and the books are clean. Reports like QuickBooks’ Profit and Loss, Open Invoices and Unpaid Bills will help you gather the data you need, while the forecasting spreadsheet will help you run the numbers and get answers fast.
- Maximise cash flow
To maximise your clients’ cash flow, you’ll likely need to increase money coming in and decrease outgoings.
To accelerate receivables, QuickBooks’ Open Invoices report means you can quickly identify which of your clients’ customers owe them the most money, so they can open up lines of communication to get these invoices paid first.
To reduce money going out, explore tax relief options. There are currently many available for small businesses to secure loans, grants, and other funds. For up-to-date information about state and local relief available in your area, check our state-by-state guide or find out more about accessing the JobKeeper Payment for your clients through QuickBooks here.
You can also consider encouraging clients to work with vendors, lenders, and government agencies to see if deferring payments or restructuring terms and rates is an option. Leverage the report data from QuickBooks to help your clients prioritise who to contact.
Beyond this, we’ve provided a range of tools to help assess which large fixed costs, like rent, insurance or payroll, can be adjusted. Taking a closer look at discretionary spending like marketing budgets, subscriptions and memberships may also help you claw back some cash.
Act now, we’ve got your back
The reality is, the coming months are crunch time for many small businesses.
However, informed and timely action will put minds at ease and make a huge difference in ensuring our small business community comes out the other side in a position to thrive in business. While it may not feel like it right now, recovery and even new growth opportunities will emerge for many small businesses.
Reach out and support your clients, taking advantage of tools that can help you quickly guide them towards stability.
Learn more by checking out the Cashflow Continuity Playbook in full here.