Published on: July 14, 2020
in: Company News
It may seem strange to think of your financial and accounting software as a way to support your business during uncertain times. With businesses following stay-at-home orders, social unrest, and other issues making it difficult for the average company to conduct business as usual, having reliable cloud-based financial and accounting software may make a big difference between a company that survives and one that thrives in this uncertain business climate.
Impacts of Uncertainty on Accounting and Finance
Companies continue to feel the effects of uncertainty in the marketplace. Some areas where accounting and finance are feeling the greatest impacts include:
- Production interruptions
- Supply chain disruptions
- Unavailable personnel
- Reductions in sales, earnings, or productivity
- Facility and store closures
- Business expansion delays
- Inability to raise financing
- Increased volatility in the value of financial instruments
- Unpaid invoices
- Customers needed longer payment terms
Each company must analyze which areas are being impacted and how they can address them. For example, companies who find that their customers are struggling to pay their invoices may offer payment terms, longer payment cycles, or other compromises to enable customers to continue doing business with them but offering some relief. They’re struggling, too.
There are numerous accounting issues that may be affected during these times of uncertainty. The list below is only a partial list of areas you may wish to examine for their impact on your accounting and financial management.
- Long-lived assets and goodwill: Your company’s financial performance, including estimates of future cash flows and earnings, may be affected by recent and ongoing events. These impacts may be indirect or direct. Reforecasting may be needed to accurately estimate cash flows.
- Impairment of financial assets: The pandemic may have made it more difficult to collect on loans, receivables, or other assets. Evaluate the reasonable and supportable forecasts for future economic conditions as well when estimating expected credit losses.
- Inventory: Since you’re required to record inventory at the lower of cost or net realizable value, you’ll need significant judgment to assess selling price as prices continually flux during the disruption.
- Revenue recognition: ASC 606 requirements mean companies need to assess their customers’ ability to pay when a contract is created. You may conclude collection is not probable. If so, adjust it’s time to adjust revenue recognition.
Challenges of Remote Work
Remote work also brings its own challenges. People who aren’t used to working from home may find the lack of social interaction difficult. Others may find adapting to video conferencing instead of face-to-face meetings and using instant messenger instead of dropping by someone’s office to ask a quick question takes more time and effort than common workday interactions.
For the accounting and finance departments, there are additional challenges. The quick shift to a remote workforce may also strain your ICFR (Internal Control Over Financial Reporting). This can make your company vulnerable to cyber-attacks and threats.
Direction and Information
The secret to managing remote accounting is to give clear direction. Information changes quickly. It can feel overwhelming to keep up with it all.
Make a plan. Address the new reality and clarify proposed policy changes. Recognize that plans will evolve and change based on changes in states and countries that reopen for business. The best accounting teams will remain flexible and adaptable to stay productive during uncertain times.
ERP in Accounting Addresses Remote Work Challenges
One way to make the challenges of remote financial and accounting easier is to use ERP systems in accounting. ERP, or enterprise resource planning software, may be site or cloud-based. Cloud systems enable users to connect from any internet-enabled device. During times of uncertainty, internet access makes it much easier for everyone to do their jobs and continue to handle their workload easily and efficiently.
Mindover Software is a software reseller with a broad range of accounting, ERP, finance, customer relationship management, and other software products, including Acumatica software and Sage 300. For more information about our products and services, please contact us or call 512-990-3994.