Companies are being forced to pivot and adapt both internally in how they handle operations and externally in how they interact with customers and maybe even the products they sell as a result of the COVID-19 pandemic. Virtually no industry has gone untouched with either significant challenges or significant opportunities (or both) during this time. Additionally, the pandemic has forced some companies to look inward and potentially face the process issues they’ve been avoiding for years either due to low energy or time. One of those areas could be your accounting operations.
Tending to and pivoting your accounting operations not only solves a real-time struggle for you and potentially your staff, but it also sets you up for increased opportunity in the future. Here are some steps to optimizing your accounting operations during this time.
Cleanup and Project
As the pandemic soldiers on and businesses only begin to reopen slowly at limited capacity, business owners should be projecting their financial outlook over the coming months and years. There is no time for waiting it out, and decisions must be made. Anticipating cash flow and redirecting dollars is on everyone’s minds rightfully so, but you cannot begin to make accurate predictions or good decisions if your financial statements are a mess to begin with. So, first and foremost, tend to this area. Understand your fixed and variable assets, your breakeven point, and your options for recovering lost revenue during this time, or at least not going in reverse. Get historical as well as this will pay off later on when considering value. If you need help reading and understanding your financial statements, check out this article for some helpful tips.
Once your books are in order and you understand how your cash flows in and out, you can begin to project how the next few months and potentially years will play out depending on the changes and choices you make to accounts receivable practices, inventory, variable expenses,and staffing. This is a time to take back control if you feel like you’ve lost it amid the pandemic.
Digitize and Automate
Cleaning up your accounting and projecting for the future becomes a lot easier when your accounting operations are digitized and automated. If you or your staff are working on desktop accounting platforms, it’s time to get in the cloud so anyone (with rights and access) can work at anytime from anywhere. This also allows you to make real-time decisions without needing to be in the office.
Additionally, if you haven’t dived into automation, you don’t know what you could be missing. Cloud-based accounting eliminates paper and transfers the data you need seamlessly to automated platforms so you can process your tasks quickly and efficiently. Automation allows for invoices to be sent and payments made and received electronically, which saves time, energy, and resources. And, it allows you and your staff to work virtually, providing greater health safety.
Outsource where needed
In times of uncertainty and risk, it may be worth considering outsourcing some or all of your accounting functions to a professional CPA firm. Outsourcing provides you with a consistent, knowledgeable CPA professional who can take the burden of your accounting processes off your plate while delivering real time results with additional advice and insight when needed. Cloud-based and automated platforms make this easy for you and your outsourced accountant to share information and data securely and frees up more time for you to focus on the other aspects of running your business in a crisis.
Each of the steps above can lead you to the ultimate pivot in your accounting processes – building value. When your books are clean, your projections are as sound as they can be given circumstances, you’re cloud-based and mobile, and you have access to a knowledgeable team to help you make better business decisions, you can begin to build value in your business. Building value will look different for everyone, but it starts by evaluating and optimizing your internal processes. Where can you be more efficient and effective? What services or products can you drop or enhance to meet changing marketplace demands and unload unnecessary production burdens that don’t translate to revenue? Use the data you have from cleaning up your accounting and tune into the internal workings of your business. You may just uncover opportunities for growth you may have been too busy to see before.
This time presents great challenges, but also opens the doors for great opportunity if we look inward. Pivoting and optimizing your accounting operations takes an investment of time and energy on the front end, but pays off dividends on the back end in a clearer picture of your business’s health and future opportunities.
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Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing, or recommending any transaction or matter addressed herein.