Accounting for clients in a crisis

How can accounting help their clients cope with the huge economic disruption caused by the global pandemic?

They will need to identify clients that need the most help, and consider how to communicate with them. Ultimately, what can they do to support them and help them survive an atmosphere of fear and economic uncertainty?

Financial Accountant asked experts for their tips on client management, communication and support.

Do a client ring-round, listen and reassure 

It is important for your clients to know that you are thinking about them and can help them cope with any changes in their financial circumstances.

You may not have answers to all their questions. However, calling each client will give you a better overview of your clients’ needs than waiting for them to contact you. Not all clients in need will contact their accountant.

“The danger is that you typically respond to [whichever client] shouts the loudest,” says Paul Barnes, managing director at MAP, which runs finance functions for digital agencies.

“I’ve seen accounting firms … who seem quite confident [on social media and at conferences] but [are] maybe burying their heads a bit now and are not used to [talking] to clients, so clients may ring other business coaches,” adds Barnes.

Categorise clients, prioritise needs

Organise clients into two main categories. Category one: businesses that are in a financial crisis and will likely financially collapse soon. Some of these businesses may have been struggling before the coronavirus.

Accountants will have to help this type of business to be wound up as quickly and simply as possible without the client “throwing good money after bad,” says Della Hudson, a consultant to accounting firms, author and former practice owner.

In category two: businesses that are in better financial shape and will probably rebound after the crisis after temporarily closing and reopening (whenever “lockdown” ends or is eased).

Some businesses, such as restaurants or hairdressers, may need to prepare for a surge in demand after it.

Accountants should encourage clients to think further ahead the usual two-to-three months. If they need to re-hire staff, or hire extra staff will they have the funds to do so? Will they have the stock to meet a possible increase in demand?

Focus on financial essentials

Advice and support accountants give clients during the coronavirus will be like the advice given during a recession.

Help the client draw up a budget, a cashflow, sales pipeline and any investment sources.

Barnes says that accountants should have an open conversation with clients about what the clients are most worried about in their personal life and business life (for example, lost revenue, not being able to pay the mortgage).

Keeping calm is vital.

“When panic has set in, wisdom and judgement is the first thing to go in the minds of clients,” says Martin Bissett, founder of the Upward Spiral Partnership, a consultancy to accounting firms.

Check financial basics. Does your client have a budget for their personal finance?

“What are essential outgoings in the month and what can you live without?”, says Bissett. “Never mind the boat, holiday or pension. Draw on cash reserves if possible.”

Next, work out a 13-week cashflow (money coming in, minus money going out).

The cashflow will highlight things such as money owed on invoices and rent payments due.

The next step is to look for cost savings, such as stopping or reducing marketing spending for a few months and maybe some software subscriptions.

Check your own firm’s financial health, how your staff are doing

Accounting firms can only help their clients if their own finances are in good shape. (So, consider your own cashflow forecast, check cash reserves etc.).

If your staff are working longer hours than usual and having to deal with a surge in stressed clients, they will need extra support (emotional support and advice, future time off in lieu, overtime etc.).

“A future question from job candidates [to an accounting firm] will be how did you look after your staff during coronavirus?”, says Hudson.

Use email and webinars to send regular updates to clients

Elaine Clark, managing director of CheapAccounting.co.uk, an online accounting firm, writes regular blogs on the coronavirus to keep clients informed on government support and other matters.

Sending regular emails and blogs to clients (linking to useful government web sites such as gov.uk) can reduce the number of calls from clients asking for information that’s easy to find online.

“If accountants handle this [coronavirus crisis] well it could strengthen their relationship with their clients,” says Clark. “I’m in the main getting very positive feedback on twitter from clients.”

Prepare for a surge of business enquiries after the coronavirus

Finally, some possible good news. Bissett says that he’s preparing his accounting clients for an “enormous spike” in demand after the coronavirus.

The economic impact of the coronavirus will “scare” many businesses into improving their finances, Bissett reckons.

This could mean doing regular cashflow forecasts and clients talking to their accountant more often, perhaps every quarter, to enable management accounts.

Businesses will want more advice on basics such as payroll, cashflow and business advice such as tax planning and help with business goals, he says.

Nick Huber is a freelance journalist