Guidance for Businesses Navigating the Financial Crisis

As you may be aware, the Senate and House have both passed an extension to the deadline for businesses to apply for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loan program. The measure will now go to the President for his signature. Still, much uncertainty remains, including the promise of another federal aid package, and the question the entire human race wants answered: when will the pandemic end?

Until more is clear, AAFCPAs advises clients to consider the following best practice recommendations to best navigate this uncharted situation:

• Revisit your budgeting and cash flow forecasting models. Project for best-case and worst-case scenarios and develop contingency plans if things do not go as expected.
• Assess your funding sources and forecast the impact this crisis will have on them in the long term. For example, if you are nonprofit who is reliant on donations, will your donors be able to give at the same level? If you are federal and/or state funded, do you anticipate cuts in funding? If you are fee for service revenue, do you anticipate a reduction in volume?
• Evaluate the impact market decline has on your future cash flow and operations.
• Assemble a team to assess inefficiencies in your operations. Can you streamline operations to control and contain costs?  AAFCPAs strongly urges clients to consider process improvement measures that can increase operational efficiencies and replace manual processes with electronic systems.
• Perform a financial analysis to determine the true margins on each program, product, or service. This will help you decide where to continue to allocate resources.
• Assess if the pandemic will impact how you run your business in the future. Can more services and activities be delivered in a remote manner? Will there be costs or costs savings for doing this? For example, does it make sense to stick with a remote or hybrid-remote workforce. This may enable you to save on facility costs.
• Identify opportunities to partner with other organizations to develop economies of scale. You may be able to share resources and control costs.

For months now, AAFCPAs has provided guidance to clients on whether or how to use benefits under the federal CARES Act, or whether furloughing or laying off workers is the right decision. This has included the development of pro-forma financial reports to demonstrate what clients’ cash flows may look like in different best-case and worst-case scenarios and based on certain assumptions. Clients are able to see the impact of different decisions and the extent to which they may mitigate those risks.

AAFCPAs is dedicated to helping you solve business, regulatory, and technological challenges to keep your company operating optimally in the short-term and long-term.

If you have any questions, please contact: Matthew Hutt, CPA, CGMA at 774.512.4043, mhutt@nullaafcpa.com; Janice O’Reilly, CPA, CGMA, 774.512.9046, joreilly@nullaafcpa.com; or your AAFCPAs Partner.