Accountants, and accounting services providers are SMEs themselves. In turn, they are other SMEs’ trusted advisors. During this very trying period where many industries are negatively affected by the world wide impact of the coronavirus, SMEs need all the correct and appropriate advice they can get from these trusted advisors to navigate through the pandemic.
Here’s how accountants and accounting services providers can serve as your critical partners in weathering the storm:
✅ 1. Be Informed
In order to help businesses that are affected, accounting services providers should first be aware of the support measures available. Whether the support is at industry levels or at the national inter ministries levels, your trusted advisors should be aware of the aids available, and understand the specific mechanics of the aids and schemes.
✅ 2. Recommend and Apply Available Aid to Clients’ Situation
With the right information in hand, the clients’ needs can be identified, and the correct support measures can be applied to derived maximum benefit. For example, the trusted accountant can advise and guide their clients if they should apply the Deferment of Income Tax Payments* or to provide option to accelerate write-off of cost of acquiring plant and machinery by assessing the cash flow needs of the immediate period. The business can then receive the benefits granted by the appropriate support measures. By applying for the right aid, business can seize new opportunities in the changed business environment.
*Notwithstanding that the period for deferment has lapsed, IRAS may still grant this relief for new applicants on a case by case basis.
✅ 3. Immediate Action
An accountant can inform his SME clients of the immediate supports measures that may save them from a collapse, and assist in implementing these measures. For example, if the SME is in desperate need of working capital, they could access the Enterprise Financing Scheme – SME working capital loan for enhanced help for SME’s working capital needs. These reliefs should be accessed as quickly as possible to maximise the impact. At the same time, the accountant can guide businesses to cautiously track their cash flow positions and forecasts to ascertain how they can service their liabilities and pay their suppliers. It crucial that businesses should continue to pay their suppliers to help avoid a wide spread collapse of the financial system.
In contrast, not all businesses can survive the pandemic. Businesses that are deemed to operate in higher-risk activities are not allowed to open since Circuit Breaker measures began on 7 April. Entertainment venues such as bars, nightclubs, karaoke outlets, cinemas, theatres, and other indoor and outdoor attractions have had almost zero income since. Even after tapping on the support measures, some businesses would still face closure. “The new rental relief framework is no silver bullet in helping businesses survive the coronavirus outbreak, and some may still see their shutters close even with the extra help” Law Minister K Shanmugam said during parliament on 5 June 2020. He added that “it is still uncertain how long the pandemic will last and it is unlikely that businesses will bounce back in the near future.” (source:Today) .
Your trusted accounting services providers hold all the financial information to your business; he would be able to provide that unbiased statement if business closure is the immediate and prudent action.
✅ 4. Rebuilding
It is a certainty that many businesses have been negatively affected by the pandemic. However, some have already started to develop a rebuilding plan to recover from the slowdown. A good approach is to study the hard numbers to determine how deeply your business has been affected. Businesses should approach their bookkeepers to check their updated financial status and cash flows. Then consider if they need funding to jump-start their business operations. As listed in our previous articles, there are several options available for government’s support. Once the financial numbers are determined, a budget should be worked out to clearly define how, what and when the money will be spent. Consequently, businesses should start building financial reserves as soon as possible, to prepare for a new peak in coronavirus cases even after the current restrictions are lifted.
At the same time, businesses can consult their accounting services provider on financial management so that they can have a clear view of their financial positions to plan for the future and outperform their peers.
Everyone needs help and good advice in a crisis. The external network of accountants, lawyers, industry organisations, and national support bodies are even more important for intangible resources during this difficult time. Your experienced accountants and bookkeepers can help you navigate the list of support measures available, get the resources you need, and ensure you’re on the right foot when it’s time to rebuild. Have you reached out to them yet?