2020 has been a turbulent year for businesses. The world is in a state of crisis with the covid-19 pandemic crippling businesses and causing heartache for business owners. All of this uncertainty is affecting SMEs to the point where they will have to make the decision of keeping the business open, fully or scaled back, or shutting down.
Fortunately, some companies have coped well, particularly those with strong cash reserves and funding facilities and some sectors have managed to bounce back throughout the crisis.
Depending on the products & services your company specialises in, your offerings might be in high demand, whereas some companies have had to adapt and rethink about their product & service lines to ensure sales and revenues steadily go back to normal. However, with a vaccine now in play for Covid-19, there is finally a glimmer of hope for the populous.
With the busiest time of the year coming up for finance teams as we bow out of 2020, year-end is now upon us. With all the uncertainty this year has brought, additional resource is likely to be required to help tackle the challenges of year end, to ensure that it’s completed accurately and on time, ensuring no delays in the analysis and reporting process.
There will be extra scrutiny by Auditors to understand viability and the principle of going concern.
Given the economic environment caused by Covid, Auditors will have to apply more rigor to the audit process. Although the principles and techniques of the audit will not change, the principles of going concern and prudence may be areas of special focus. Previously agreed policies such as provisioning, depreciation rates and revenue recognition may be challenged. Companies will need to be able to demonstrate their ability to continue to trade for a period of at least 12 months form when the accounts are supplied – they cannot and should not rely on their auditors to do the work to justify this position.
Areas of additional detail requirement may be cash flow, impairment, bad debt provision, staff costs etc.
Where businesses have been closed or not been able to transit to online trading, most notably in the retail and hospitality sectors, revenues will have plunged and the ability to collect on previous sales may also be impacted. Is your cash forecast solid enough? Do you need to source new funding? Have you made full use of Government grants and concessions? Have you negotiated with your Landlord and key suppliers for cost reductions and better settlement terms?
Where trading volumes have been radically impacted, if you have a capital-intensive business, recovery of capacity utilisation may take several years. The Auditors will insist on seeing your justification for any impairment review?
Do you need to downsize your business? Staff costs are often substantial and the process of releasing people complex – any redundancy or closure provision will need to be fully documented, analysed and justified prior to the year end.
Many businesses may need a strategic review and an in-depth revamp of their short to medium term plans in order to address these challenges. EFM has the in depth skills to assist in all of these areas.
Existing Finance staff may be already stretched with managing the day to day running of the business.
With the Covid pandemic still rocking businesses across the globe, the impact has meant that staff have had to be reduced in number, through redundancy or furlough, to help reduce costs. However, some may have been taken ill with the virus or other winter illnesses, which means that ongoing work and projects will be delayed or halted indefinitely.
Also, there may have been an increase in workload due to deferred earlier work (such as prior year audit) being caught up creating that ‘perfect storm’. With the finance team members that are still in play and down in numbers, workers are going to be stretched for time and depleted in energy due to the increased workloads.
Help relieve some of the pressure off of your finance team by bringing in an extra pair of hands and hiring an outsourced, cost-effective Finance Director or Financial Controller. By choosing a part-time financial management expert to enter the business, you’re paying for what you truly need when you need it, allowing you the time to focus on the core functions of the business, confident in the knowledge that critical finance activity is in expert hands.
One of the biggest advantages of hiring a part-time finance specialist is the price. As a business owner, you’ll be looking to save as much expense as possible whilst getting a return on your investment. EFM offers an efficient, ‘pay as you go’ service. Companies can now benefit from an experienced Finance Controller or Director’s expertise on a part-time basis, thus you only pay for the hours needed and used, and you do not have to pay large one-off recruitment fees.
A good example of this is how EFM recently supported a language £3m revenue services company, with their finance requirements to help improve their overall standing and save on budget as much as possible to ensure survival throughout the Covid pandemic. By replacing their full-time Head of Finance resource with one of our local part-time Finance Directors, we have managed to save the company up to £5k per month.
Rapid Reaction when a Crisis Arises.
EFM is a nationwide team of Finance Directors, Financial Controllers and Growth Partners. We provide ‘pay as you go’ financial management services to businesses that want the benefits of an experienced finance professional, but without paying a full-time salary, on a recurring, limited engagement and project basis. Our team of over 70 EFM experts are spread nationwide across the UK and Ireland. Each EFM person has their own set of skills harnessed over time and unique qualities, ensuring a bespoke and professional service.
In recent months we have reacted at short notice helping clients out within a matter of days in situations such as helping the local area MD meet parent company reporting deadlines, ‘holding the fort’ for an unexpected staff departure, covering for unforeseen finance staff sickness, adding an external finance perspective over a change in company fortunes, retrieving declined funding offers due to poor data adequacy and providing a cool head – been there and done it, when chaos has broken out (e.g. cancelled contracts, supplies held up at docks, customers and suppliers tightening trading terms, insurers declining cover, landlord demanding a large rent increase, etc).
If you’re interested in finding out how our part-time, nationwide team of finance and business growth professionals can help to support your business this winter or if you have any burning questions, get in touch today through our FD on Demand hotline! Contact our central team via firstname.lastname@example.org or call 01582 256122.