By Leon Gettler >>
THE COVID-19 crisis has shown businesses the importance of getting real time information and adapting their business models to keep customers on board.
Colin Hewitt, the founder and CEO of Float, a Scottish cash flow startup that opened an office in Sydney in 2019, said this had become absolutely critical.
Mr Hewitt said there were cash flow implications for businesses on government support such as JobKeeper in Australia, and similar programs overseas.
He said schemes such as JobKeeper left businesses struggling to understand needs around their staff. As companies look at the future of JobKeeper and whether it will be removed, they need to conduct scenario planning about what they could afford and what paths they need to plan for.
“We’ve seen a huge surge in demand in our product from accountants and book-keepers who are needing to do this en masse for 50 to 100 of their clients, because they are all asking the same questions: what happens if the JobKeeper scheme runs to an end,” Mr Hewitt told Talking Business.
WORKING ON SCENARIOS
Scenarios include putting people back on the payroll along with depleted and uncertain sales over the next period.
Mr Hewitt said he had “never seen anything like this before in business”.
He said COVID-19, with its differing impact across different regions and cities had created enormous cash flow implications for national businesses.
“From a cash flow point of view, we’re seeing people running different promotions in different parts,” Mr Hewitt said
He said this saw companies running schemes in which they approach customers ‘doing it hard’ in certain regions and cities and cutting special deals with them, offering their service at reduced rates to give them the chance to survive as a business.
“Those schemes will need to be rolled out differently for different locations because everyone is going through different things,” Mr Hewitt said.
“More than ever now we’re seeing the need for businesses to get their financial reporting cycle in a much faster loop from when they’re recording their sales and expenses, getting those plugged into their accounting software and getting real time cash flow reporting as soon as they can because things are changing so fast.
“Traditionally we’ve had spreadsheets which have had forecasts that are made up of maybe 12 to 24 months and you’ve had your management accounting which is sitting somewhere else,” he said
“Really we’re seeing the opportunity for those to come together so the management accounts are impacting the forecasts in real time and people can actually make faster responses.
“That opens up possibilities for businesses. Instead of having a financial report that many business owners don’t understand hit their desk a couple of months out of date, what they can now expect is, if they are using the tools now available to them, they are getting management information almost to the day and that’s then able to inform their forecasts.”
HELPFUL FOR GLOBAL MARKETS
Mr Hewitt said this method would be particularly helpful for businesses in global markets.
He said companies will need to assess how COVID-19 has, and will continue to, affect their businesses. Some of the issues may not be related to COVID.
“We’re not out of this yet,” Mr Hewitt said.
The uptake of digital accounting will make businesses more robust to cope with the next pandemic, he said.
“It’s now absolutely critical that businesses have that real time dashboard of what is happening in their business and using these data capture tools, the online banking, the accounting software and the reporting and forecasting software.
“This is absolutely going to help to know your tax liability, to be able to understand which clients are not paying and how much cash you’re sitting on that is receivable.
“So all that information is there to help come together and make better forecasts.”
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.