How Accountants Can Avoid a COVID-19 Plane Crash
Accounting firms are often described as recession proof, however, we have just found they are not immune from the effects of a pandemic. The accounting profession has undergone massive change courtesy of the COVID-19 pandemic. Over the last month you’ve probably been very focused on counselling your anxious business clients, many of whom have gone into hibernation. At this time, your clients expect you to be all over the government stimulus packages, loan and debt deferrals as well as the Job Keeper scheme and state government grants. It’s been a whirlwind.
The shock phase is behind us and with your help, clients are shifting from the panic phase to the planning phase. One of my accountant clients described the last month as a plane crash complete with fear, panic, spot fires and mass casualties. He said the advice he was giving clients was based on their degree of ‘injury’ or even survivability. He was very clear, some of his clients won’t survive this crisis.
Expanding on the plane crash analogy, your clients view you as their financial ‘pilot’ and in an emergency you need to put on the nearest oxygen mask so you don’t lose consciousness and focus. Right now, you need to help yourself before you can help your clients. It’s time to focus on you and your practice and I will examine the impact of COVID-19 on accountants in this article.
With most of your clients blown off course you need to develop a new flight plan to help them navigate their way through all the turbulence. Your team (cabin crew) are expected to service the needs of your clients (passengers) and regularly communicate with them so they remain calm. By now, you should have relayed all the information about the government stimulus packages to your clients and given them ‘crash landing’ instructions.
The pressure in the ‘cabin’ the last few weeks has been extreme with many clients making ‘mayday’ calls and sending distress emails. In flight, the human body is not designed to survive at high pressure altitudes so the solution is to depressurise the aircraft cabin. As accountants, you need to put on your oxygen mask and communicate clearly and regularly with your clients. You need to know everything about JobKeeper and answer all their FAQ’s to keep your clients calm. You and your crew need to share the new flight plan with your clients and this is the emergency procedures or flight plan my clients in the Accountants Accelerator Group are giving clients:
- Update Your Financials - this includes key figures regarding wages and profitability. These figures are essential when applying for some of the government subsidies that require proof of the decline in revenue as well as qualifying criteria for things like the JobKeeper scheme. It also gives you a picture of their tax position which will help you decide if you need to look at deferral of any tax debts.
- Prepare a Cash Flow Budget - not easy to produce in this these uncertain times but it’s all about calculating the business’ cash position over the next few months. Factor in the entitlement to government grants and Job Keeper payments. It will help identify the need for finance, when and how much might be required.
- Apply for Government Stimulus Incentives - Federal Government Cash Boost of between $20k and $100k for eligible businesses
- Apply for State Government Subsidies & Grants - state by state it varies but for example, Victoria and NSW are offering $10k payments for eligible businesses. These figures can be added to the cash flow forecast.
- Job Keeper Entitlements - with updated payroll records you can assess any entitlements and those figures can also filter through to the cash flow forecast.
- Understand the Loan Concessions provided by the banks
- Consider eligibility for Tax Office Deferral Options
- Marketing Plan – every business needs a new marketing plan!
In a recent post I examined the different responses to COVID-19 from Proactive vs Reactive Firms. The proactive firms have been on the front foot sending clients a series of updates and an action (flight) plan. The reactive firms have simply been overwhelmed by the volume of client mayday calls and are on the back foot. The clients of the proactive firms feel their pilot is in full control and having a ‘flight plan’ means they have a sense of direction so they remain relatively calm. By contrast, the passengers on the reactive flight are in a tailspin, the pilot is not communicating and the cabin crew don’t have a system or strategy to roll out. Without newsletters and emails these accounting firms are fielding repetitive questions that are both time consuming and energy (oxygen) draining.
As I mentioned in the post, What's Your Client Covid19 Game Plan?, this is a game changer for accountants and a once in a decade marketing opportunity. It’s no longer business as usual with staff working remotely and many struggling to adjust to having their children in their new workplace. Instead of focusing on getting tax returns out the door and completing consulting assignments, the focus is to help clients understand and claim government grants and subsidies. Right now, clients are more worried about cash flow and survival rather than tax returns.
The March BAS and interim financial statements are now the main priority to calculate and access the government hand-outs. Clients might need help to prove their decline in revenue to qualify for the support packages. They might need help with JobKeeper and require interim figures, possibly a cash flow budget and maybe help with loan applications or how to pivot. On the other hand, some clients running supermarkets or distributing cleaning products might need help dealing with their surge in sales.
It’s an incredible time.
Accounting firms are also adapting with some operational changes like conducting virtual client meetings on Zoom. Your clients need you now and just because you can’t have face to face meetings doesn’t mean you can afford to stop consulting. You’re probably also teaching your clients to work with this technology and at the end of this crisis, the workplace of the future might look very different with some of your staff working remotely. Of course, this sudden transition to working from home also creates new cyber security issues with housemates sharing work computers and employees using their own devices.
No doubt you’re probably working long hours which will help your billings but client cash flow is going to be tight. Plenty of firms are offering fixed price packages for JobKeeper assistance and you need to charge for this highly valuable advice. Fixed fees and upfront pricing might give structure and certainty in a time of uncertainty. Work through your debtors and have empathetic conversations with clients to build stronger relationships to make sure you sit at the top of their payment list. Consider offering alternative payment options such as fee funding. Statements must go out on time and follow up!
There’s no doubt that some clients won’t come out the other end so there will be losses. As you know, in public practice you have to fill many roles so be prepared to play grief and even marriage counsellor. Most importantly, don’t forget your role as pilot because you are the marketing manager and rainmaker. With the likely casualties, you need to replace those clients so it’s not the time to stop your marketing. In fact, it’s time to amplify your efforts and keep giving your clients updates and encourage them to share them with their friends, family and industry colleagues. Remember, the clients of reactive firms are in the brace position waiting for their pilot’s instructions but those pilots are too busy to read the warning signs. There will be a lot of client migration at the end of this pandemic.
Each of your clients who survive this traumatic flight will remember everything about the journey when we get to the other side (and we will!). The movie, Sully starred Tom Hanks as Chesley "Sully" Sullenberger, an American pilot who became a hero after landing his damaged plane on the Hudson River with all 155 passengers and crew surviving with only minor injuries. Hopefully you also emerge as a hero in the eyes of your clients.
If you need any help with your flight plan we invite you to contact us today.