Coronavirus (COVID-19) has led to immense upheaval economically and socially over a short time period. Most businesses are dependent on staff working from home. Schools and higher education institutions are closed. Restaurants, malls, movie theaters, bars, and all tourism-related businesses are looking downcast. The restaurant and entertainment industries will suffer if the pandemic continues to keep people indoors. Right from the farmers to the suppliers – all in the supply chain will be affected. Airlines, trains, cruise ships, oil & gas companies, professional sports are all the worst hit with public spaces closed. Until a suitable vaccine is developed, and freely available, which might take at least 6-9 months, billions of revenue will be lost.
On the other hand, sanitary & cleaning suppliers, retailers, e-commerce marketing companies, pharmaceutical companies, video conferencing & communication technology companies, online gaming & streaming platforms, logistics & delivery companies are all seeing a surge in their activities and benefiting greatly.
As an accounting firm, you will need to assess the risk with the existing set of clientele. A few may see a dip in profits, with pressure on your firm to reduce the accounting fees / shelve planned projects. They will also need your expert insights on reducing cost, negotiating with banks on restructuring existing debt among other services.
On the other hand, you may have clients with a surging business requiring additional accounting support, and guidance on new projects/acquisitions and tax planning. With change comes opportunity. It is imperative to remind your existing clients and prospects that you are standing by, ready to offer support to navigate through these troubling times.
The tax calendar has been subject to a number of changes due to the agitation. While there have been extensions on filing deadlines for different types of returns, there are some due dates that remain unchanged. Make sure to coordinate with your clients on the estimated tax payments due July 15, 2020.
Revisit existing engagement letters and secure updated engagement letters from clients in case of modifications to the scope of services. Do a periodic review of your client list to identify clients struggling with cash flow issues, and open up discussions with them proactively to discuss payment plans.
The federal and state governments have been taking up stimulus programs towards COVID-19 relief, especially the Coronavirus Aid, Relief, and Economic Security (CARES) Act for small businesses. Accounting firms are assisting clients with evaluating various such loan programs, amending prior-year returns to reflect changes to net operating loss regulations, and accounting for fund usage from the Paycheck Protection Program.
These are unusual times for the world and hitherto unexplored territory for the accounting profession. While we continue to grapple with the impact of COVID-19 in the months to come, the need of the hour is for accountants and CPAs to adapt and offer clients advice on potential opportunities as the economies and public morale improve.