In Pursuit of Profit
Read our expert article below or sign up to get articles sent to your inbox.
The pandemic caused innumerable business obstacles, and among all the added barriers, accounting-related woes have emerged as a universal challenge.
Every day we talk with companies that are fighting the good fight to keep up with their daily accounting demands amid pandemic-related complexities. And while each business has a unique story, what we are hearing in the way of accounting challenges is starting to become predictable. Whether the pandemic has increased or decreased revenue, the common threads that unite companies these days are more work, staffing problems, late and messy financials, a lack of accurate and actionable information, and budget issues.
Our experts have teamed up to provide you with the advice you need to overcome today’s most common bookkeeping and accounting problems whether you plan to handle them in-house or outsource their management. Find out how to recover from these accounting challenges to improve operations and facilitate growth.
If you feel like you have more accounting work to do these days than before, you are not imagining it. With numerous rounds of government stimulus packages across the early stages of the pandemic, small businesses are having a harder time with their ongoing accounting to keep compliant with the terms of the money they received. Based on when government dollars were accepted and under which program, there are accounting considerations that must be followed moving forward and these nuances are still being dealt with across some industries.
Even for companies that did not accept any federal or state funds, short-term business operations and staffing changes during the pandemic caused a ripple through their financials that will remain for many more reporting periods to come (and in some cases may never see a “return to normal”). One such change was the move to remote work. With employees working off-site, there are additional costs and considerations that need to be addressed. New technology may be needed to facilitate communication and opportunities for automation may arise.
How to Rebound:
Some of the added work right now is ripe for automation, while other types of work need the gentle hand of an experienced professional. Learn how to differentiate between the two and bring in technology, where possible, to lighten work burdens. For example, utilize things like expense management software to reduce the time needed to get the information that is required to reimburse employees and lessen the work associated with doing so. Where the expertise of an accounting professional is required, lean on the services of a fractional accountant to offer the help you need when you need it.
Career changes, burn out, retirements – we have seen it all during the pandemic. But regardless of what is taking an employee away from their role at your company, the result is the same – a vacant role. The Great Resignation has caused companies to experience record levels of employee turnover, disrupting not just accounting departments but the business as a whole. With this churn employee morale and future revenue potential are both down, adding fuel to the fire. And that is just addressing the matter of attrition.
Then, there is also the growing problem of employee-role misalignment. With companies struggling financially and losing employees unexpectedly, the pandemic forced many organizations to ask their remaining employees to do more. But as employees picked up the slack, donning more hats, in some instances they began undertaking jobs that they were underqualified to do, further exacerbating the problem of burnout and low employee morale.
How to Rebound:
Take the time to analyze whether you have the right accounting team in place to carry out critical business functions effectively instead of focusing solely on the number of employees. Do not look at superficial criteria like credentials or years of experience – instead focus on fit with the company’s needs to ensure staff has the right skillsets in the most critical areas for business success. In places where employee turnover or restructuring has created gaps, plan to hire accounting staff to get back on track.
Where budget constraints exist, focus on your biggest value-add roles like a Senior Accounting Manager or Controller to ensure that your company will have the financial leadership needed to manage its ongoing needs.
Employee turnover is costly and time-consuming and a real pain, not to mention messy! The work that employees do gets muddled when there is handoff due to turnover. While this is bad under any circumstance, it can be catastrophic when the work is your company’s financials. Messy books can lead to poor cash flow management, incorrect financial reporting, and inaccurate tax filings.
How to Rebound:
Obviously, without having personnel that is qualified to clean up accounting records your financials do not stand much chance of getting back on track, so bringing in the right help is a crucial first step. Once you have outsourced your accounting needs or hired well-qualified employees, it is time to review your daily accounting activities and procedures for closing the books. Create formalized accounting policies to simplify the closing process so that if turnover happens, you are prepared. Then, stick to them! This may sound like an obvious step, but you would be amazed at how many businesses have the documentation needed to ensure continuity and simply do not follow it.
Lack of Timely Reporting
Messy financials and late reporting usually go hand-in-hand because when it comes time to close the books for the month, quarter, or year the staff responsible for doing so are too busy fixing errors and omissions to meet deadlines. When there are business owners, partners, lenders, and investors relying on this information to inform their decision-making, that can be a big problem (and may even result in penalties).
How to Rebound:
Conducting a formal financial assessment is a great way to find out where your reporting shortcomings are (and why they are occurring). Once you know where the bottlenecks and hang-ups are, you can take the steps needed to fix them to improve your ongoing reporting including implementing new technology, where necessary.
The pandemic made forecasting largely an exercise in futility because demand shifted so wildly and changing government regulations created volatility. In the face of unprecedented challenges historical data no longer helped to inform today or tomorrow’s decisions. Combine that with ongoing supply chain issues and strategic business planning started to feel like more of a gamble than a calculated risk.
Over the last two years the information that business owners were using to make critical business decisions was totally unreliable. Now, we are starting to see the light at the end of the tunnel, but messy books and inaccurate financial reports still threatens this critical area.
How to Rebound:
Entrust the right personnel with FP&A (financial planning and analysis). In a time when employees are being asked to do more than they are accustomed to, we have seen small and mid-sized companies handing their financial planning responsibilities off to their accounting staff. This is a big mistake because accountants should not do FP&A. Finance personnel and business analysts are uniquely equipped to handle this kind of responsibility, while CFOs are well-positioned to oversee these efforts as a part of the company’s broader financial landscape.
Tightened budgets have caused the difficult job market to sting even more for many companies. Not having the budget needed to hire top accounting talent or implement best-in-class software has created an added barrier for cash-strapped businesses.
The most unbelievable part of what we have been hearing every day from business owners is that even organizations with soaring sales have been experiencing cash flow problems from time to time due to things like supplier delays. As a result, budget constraints have popped up everywhere, even where you may not have been expecting them.
How to Rebound:
The best way to combat budget constraints in the hiring process is to hire a fractional role externally instead of a full-time role internally. By outsourcing the position, you can convert a fixed cost into a variable cost, which is easier to manage with a small budget. Additionally, you can pay for as much or as little time as you need over any time horizon you desire to reduce costs. That means you can bring someone on to do part-time, short-term, interim, or project-based work without the added expenses of hiring an employee internally such as benefits, payroll taxes, and bonuses.
Hiring a fractional accountant will give your company access to the kind of accounting support needed to fix your pandemic-related challenges. Our professionals bring a breadth of experience that only comes with many years of in-depth work across a wide variety of industries. We can provide less-than-full-time support to match your weekly, monthly, or year-end needs while staying within your budget.