Accounting Steps To Take Due To COVID-19

April 3, 2020

The coronavirus, or COVID-19, has unfortunately put a wide variety of “non-essential” businesses on lockdown for at least the next few weeks. If your company is among these businesses, knowing what steps to take in regards to accounting can seem overwhelming at first. Here, review what your local Los Angeles accounting firm recommends to navigate your finances during this trying time. 

Review Your Financial Portfolio

You may need to reduce the amount of money going into your company’s 401K plans in order to pay employees the same rate or offer compensation if you need to temporarily lay them off. Also examine your company’s stocks in light of the coronavirus since making new investments, such as in hand sanitizer companies, may be exactly what your business needs to enjoy a boost. 

Review all other investments and determine where you can redistribute money to keep employees on retainer. For example, issuing a 10 to 20% pay decrease among your company’s CEOs allows you to keep more “regular” employees on staff. 

Consider Restructuring Existing Debt

Any outstanding loans your company is currently paying on may require additional financing due to the COVID-19 outbreak. Your Encino tax consultants will help you determine if bridge financing or other restructuring is necessary. It may also be a good idea to request debt waivers until your business again has the revenue to continue payments. 

Evaluate Revenue Variables

Normal variables related to your revenue such as refunds, price concessions, discounts, and performance bonuses could require temporary holds so you have more money to pay employees their regular salaries and account for other business costs such as rent, utilities, and license fees. If you’re restricting some or all of these things for the time being, let you employees and customers know that you hope to reinstate them as soon as possible. Most people will understand to help you avoid loyalty problems. 

Stop Deliveries 

There’s no reason to keep perishable deliveries coming at this time since they will spoil and result in lost revenue. It’s also a good idea to cease non-perishable deliveries until the non-essential business lockdown lifts since you will have plenty of inventory to sell once you reopen. Putting a halt on shipments saves you from paying unnecessary fees so you enjoy higher cash flow. 

Get more COVID-19 business assistance with accountant services in Los Angeles from Wallace & Associates