The economic impact of COVID-19 on small and medium-sized businesses has been swift and significant.
Although difficult, it is extremely important in these circumstances to adjust your forecasting and your financial plans as quickly as possible.
There are three critical actions to take for your business to ensure a smooth execution of your updated financial strategy.
The first items to review are your financial controls. With a reduced budget and uncertain prospects for revenue, you have to make sure that every single purchase is necessary and accounted for. Your time is more valuable than ever, so sending out constant emails or having stern conversations with employees when they go over budget are not valid strategies.
Be proactive and create a system that makes it impossible for unapproved spending to take place. Put a solution in place that requires authorizations for both on-card and invoiced spending. This will help you get insight into every potential transaction that can take place and prevent waste.
Consider switching to using virtual cards to you can tie controls directly to payment methods. Create cards specific to vendors and set limits on purchase amount, frequency, and category. Not only will this block overpayments, it will help you gain visibility into every payment being made.
Do an internal audit of your spending and look through every single category of spend. There are most likely going to be unnecessarily high expenditures, and you need to cut these as quickly as possible. Anything that isn't considered crucial to the business, such as employee perks and a large office, should be eliminated or reduced sharply. Look at everything from the perspective that work-from-home is the new standard, and try to cancel every expense that has to do with your office.
Go through your transactions for every vendor and consider whether they are needed for your business to continue operating. If they aren't, then cancel them quickly before the next bill hits. If they are necessary, then renegotiate your contract to push for more favorable terms before the renewal date hits. However, make sure the services you cancel or downgrade don't harm productivity. As important as it is to cut spending, it's more important to make sure that your business can run efficiently.
There's going to be a seemingly unsurmountable number of challenges over the next several months. You and your finance team need to be able to act swiftly and dedicate their time on strategy to get your business through these times. If you rely on outdated, patchwork systems it will be extremely difficult to achieve the level of speed and flexibility that you need.
Sit down with your finance and IT team to go through all the software you currently use and the processes you have in place. You will most likely find inefficiencies and repetitive operations that result from using the wrong set of tools. Look for spend management solutions that were built to handle distributed spending, especially ones that can be implemented quickly and used easily. You don't want to waste more time than you need.
Ask for help
Talk with the companies you consider about your situation so they have an understanding of what you expect. Be clear about your timeline and what processes you are looking to automate. Make sure that once the software is running, any issues can be solved with minimal effort. Lastly, get feedback from your employees to make sure this is something they feel can fit naturally into their existing workflows. Without easy adoption, even the most elaborate software can quickly turn into a mess.
These are unprecedented times, but with the right culture and tools your business can conquer the challenges to come. Invest your time and effort into structuring your company so that your finance team has the time and resources they need to constantly update your strategy. Keep in mind that being proactive is key, so find a software solution that consistently removes friction and helps you stay on top every day.