COVID-19: Impact on Accounting & Financial Reporting

COVID-19: Impact on Accounting & Financial Reporting

Covid-19 has made an impact on every single person and business around the world. The pandemic has left many firms and institutions unsure of their financial status, mainly because many companies didn’t expect it and even more haven’t planned for it. The financial sector is impacted by halted loan repayments, staff reductions, and tax institutions having to step in and save businesses by offering financial services and care packages to prevent companies from closing. 

Many countries were forced to make large loans to cover their expenses and the nation’s well-being, which will likely be ongoing until Covid-19 is brought under complete control. 

Many businesses do not have the “Act of God clause” inserted into their contracts, prohibiting them from financial responsibilities, which can seriously impact companies trying to stay afloat during a pandemic. This affects tax declarations and returns. It also affects pending registrations and functions awaiting approval from HMRC. Many businesses that need accounting advice are smaller businesses where their assets are now brought into play, and foreclosure seems imminent. 

Fortress Accounts are one of the top firms trying to find a safe footing around this global pandemic so that many businesses trying to survive actually do. Advice from a chartered accountant is the first step many companies need to take if they have any hope of coming out of this pandemic without a considerable loss.  

Surviving a pandemic

Tourism, food and beverage and travel industries are some of the more prominent sectors affected by Covid-19. Asset finance has also been in the spotlight for the first time during a global crisis because the revenue loss hasn’t only affected the lower-income sector but the higher turning financial markets. Support packages are being offered to help businesses avoid business rescue applications, but it is increasingly challenging to keep the needs stable without consistent trade. Retrenchments are also one of the things that these care packages and financial plans need to cover. Many businesses don’t consider the implications that a pandemic of this magnitude can cause. Smaller businesses might not have the economic structure to carry the enormous financial burdens. Suppose a company isn’t making any money and putting good accounting services to use. In that case, they can’t avoid massive layoffs of staff because they don’t have any cash reserves to bring the team back during their financial recovery period.

These are some of the things that companies will need to speak to accounts about moving forward into the next few years to control the impact Covid-19 has had on businesses and their ability to function during a pandemic.

Safety precautions

The primary way to cushion some of the damage is to get an accountant or financial advisor to go through your business’s books to free up some reserve cash. Doing this might mean releasing some assets or selling off shares. Investors could also look into merging companies, and with the help of an accountant, could set up a structure that keeps the current business from additional debt and staff from retrenchment. An accountant can help look into disproportionate assets and relieve possible closure by selling them off as stock or as a means to pay off outstanding funds. Now more than ever, an accountant is an asset in itself. Covid 19 continues to change the financial status of everyone’s trade around the world. While more prominent industries like travel and import and export are still primarily affected, a qualified financial advisor can help relieve some of the damage moving forward.