Practical Advice for Finance Teams In Economically Uncertain Times
With governments taking ever more drastic steps to contain Covid-19’s spread, businesses face an increasingly uncertain future. But while it’s tricky to tell when it’ll blow over — there are some steps you can take to can prepare.
Here’s what the economic outlook is looking like in the wake of the Covid-19 pandemic, and some practical tips we think can help your business weather the storm.
How will Covid-19 affect the economy, and what does this mean for businesses?
Predicting Covid-19’s long-term economic impact is like racing Usain Bolt. The situation is continually evolving, so it’s difficult to keep up.
As the situation started worsening, stock markets across the world nosedived. Goldman Sach’s (as of 20th March) revised their estimate to say the US economy would drop 24% in Q2, then the rest of the year for annualised GDP estimates look like this:
The US Treasury secretary, Steve Mnuchin, has warned that the unemployment rate could rise above 20% (twice the peak level during the financial crisis).
Battening down the hatches: 3 steps you can take to protect your business in the coming months
The global situation is changing by the day but there are steps you can take to protect your business: strengthening your remote-working processes, optimising your expense policy and keeping your spending in check.
Step 1: Optimise your expense policy
Having a clear expense policy that keeps everyone accountable is key at the best of times. But with routines disrupted, it’s even more important to communicate clearly with staff
With this in mind, now is as good a time as ever to go over your expense policy and improve it. Here are a few things you may want to consider:
- Is it sufficiently simple? The more straightforward your rules are, the more likely your staff are to remember and follow them
- Is it fair? According to our research, 40% of employees would spend more responsibly if they had tighter controls. But if people have to faff around for hours to stay within spending limits, it’ll make them resentful. Some flexibility goes a long way
- Is it flat? Your expense policy should apply the same way to everyone, whether they’re the CEO or the intern. Making it okay for some staff — but not others — to flout the rules creates the wrong atmosphere
- Is it easy to get reimbursed? As great as it would be, taking your staff’s word for it isn’t good practice when processing expense claims. But they shouldn’t have to fill out several forms in triplicate, either
Step 2: Enable employees to spend remotely with virtual cards
Many teams are working remotely for the foreseeable future and ,whereas before, employees may have shared a physical corporate credit card for spend and expenses, this won’t be possible for many people right now.
Soldo’s virtual Mastercards may be a suitable replacement in the current climate. These can be issued rapidly to all employees at a company to enable them to instantly make online purchases for individual expenses (like remote equipment) as well as departmental or project spend.
Employees can have multiple virtual cards. One for their own expenses, with a budget set by admins, as well as multiple virtual cards connected to ring-fenced budgets for departments.
Step 3: Keep spending in check
Because of social distancing, your staff probably won’t be travelling or entertaining clients in person for the foreseeable future. Which means your T&E spend will drop. That said, with the economic outlook uncertain and your profits likely to take a hit, the more control you have over your spending, the better.
With this in mind, it’s worth carrying out a spend analysis. This will help you:
- Get more clarity over where you’re spending money
- Identify overspending or inefficiencies. Your teams might be paying separate software subscriptions when you could negotiate a cheaper enterprise plan, for instance
- Make more accurate budgets and forecasts
It also helps if you monitor staff spending. An expense management platform can allow you to set limits or even disallow certain purchases without having to actively police every single transaction.
Step 4: Strengthen your remote-working processes
You’ve probably had your fill of this already — we’ve even put together our own handy list of work from home tips — but it bears repeating. To limit Covid-19’s spread, social distancing is crucial. So, as many as your staff as possible should work from home. Github have produced a comprehensive guide on going fully remote too.
There’s a bevy of file-sharing platforms, video-conferencing programmes, messaging apps, and other software that facilitates remote collaboration. And if team members need to make work-related purchases, virtual prepaid cards can help you avoid the risks of sharing financial details online.
But having the right tools is only one piece of the puzzle. Just as important, you should have clear processes in place, so staff know what’s expected of them.
You’ll want to make sure they:
- Keep sensitive data safe
- Protect client confidentiality
- Are responsive and productive
At the same time, beware of being overly controlling.
If you’re new to remote working, you may worry staff will take the opportunity to binge Netflix, nap, or find other ways to blow off work. But a 2-year Stanford study found remote workers took shorter breaks, got more done, and were 50% less likely to change jobs.
Bottom line: make your expectations clear, but trust your staff to come through.
Prepare for the worst, hope for the best
Stephen Covey, author of the bestseller The 7 Habits of Highly Effective People once said that: “If there’s one thing that’s certain in business, it’s uncertainty.”
Sadly, nobody knows what Covid-19’s outcome and its effect on businesses will ultimately be. But empowering your staff to work safely and making sure you have a handle on your spending will help you be as prepared as possible to navigate your way through the disruption.