Back to the office: preparing for the costs
It’s safe to say that there were very few businesses that would have been prepared for the impact Covid-19 has had on their team, operations and revenue. In just a few short weeks in March everything changed so dramatically and so quickly that it was extremely difficult for finance teams to be able to plan, manage and navigate through it.
For many businesses, large chunks of their workforce were required to move to remote working, often within the space of 24 to 48 hours. Business owners found themselves locking up the usual HQ or office spaces indefinitely and all the operating costs that come with it, suddenly fell off a cliff.
And of course there also came the really tough and difficult business decisions affecting colleagues, where did the business need to furlough staff or cut wages to help steady the ship in such unusual times? All of this had to be untangled by finance teams.
At the best of times a finance leader's role is very complex and to be able to inform the business means staying on top of the numbers. But how could any accountant or finance team member manage a situation as complicated as this in real time so to speak? The goal posts have been ever changing.
Since Covid-19 transformed the way we all go about our daily lives, predicting what comes next for finance teams has been the real challenge. Forecasts and reporting for the year have had to be thrown out of the window, replaced with short-term thinking and ensuring cash-flow in the immediate future is going to support the business.
So if it’s so difficult to plan, what can finance teams pinpoint in the coming weeks or months that they can prepare for that will help them to build towards an overall financial strategy?
When business owners reopen their doors for the first time after lockdown all the usual running costs will need to be planned for. Whether you're a small business that has one premise for less than 20 employees or, like The Access Group, has thousands of employees across multiple locations, your challenges are the same.
Bills will need to be considered as electricity and gas is once again used to fuel activity inside your office. Perhaps if you were able to postpone debt payments during lockdown like your mortgage or rent, it’s likely these will need to be picked up again from the off and depending on your circumstances, might see increased repayments.
It’s also important to consider costs for supplies, like stationery, toner or workwear, as well as any software licence updates or renewals that need to be processed across the business. Marketing too will be looking to ramp up activity in a bid to help offset some of the lost revenue incurred during lockdown. Communication is key here with other heads of departments to ensure anything they are planning is considered across budgets within the business.
Many decisions will need to be made about the team too. Depending on what sector you operate in, the social distancing and lockdown guidelines would have had a differing impact on your business. If you work in hospitality or construction for example, it’s likely you would have completely closed or shut down significant parts of your operation, leading to a large percentage of the workforce having to be furloughed.
Whereas if you’re a recruitment agency, it’s possible most of your staff continued to work from home, and only certain members of the team had their hours reduced, wages cut or were furloughed. Whichever category your business falls in, you will still need to account for the added admin for claiming back the money for furloughed staff from the Government as well as any business loans that you had to take out to support the business.
So, payroll will need to plan ahead and think about how wages will look in the months following lockdown to be able to inform the wider business.
You may have found a surge in expenses after colleagues transitioned to remote working, you may again find a similar spike when returning to the office - but probably not immediately. As restrictions will be slowly lifted by the Government, it’s unlikely colleagues will be travelling to see customers and clients from the off or going to external meetings.
So it’s not business expenses you’ll have to worry about but more expenses for the office like for milk, tea and coffee. Little things that when you have a big team, can add up. Team bonding and welfare will be important too. You may find various teams will be investing in training or planning outings and trips - especially as soon as those pubs and bars reopen their doors again. In some cases, you’ll find the business picking up the tab - we imagine it might be an expensive one!