Finance professionals at small and midsize businesses have plenty to consider when it comes to guiding organizations through the coronavirus pandemic. Straightforward cash concerns are at the center of their worries. More than 80% expect some sort of revenue decline in the second quarter, and 75% have taken steps to reduce costs, according to a recent survey.
But the finance professionals are still thinking about investment and keeping businesses operational, a survey by Sage Intacct shows. Nearly one-third of respondents said that as their businesses stabilize, they plan to invest in purchasing, or expanding the use of, video or web conferencing systems, and other digital upgrades are planned. When stabilization will occur is tough for anyone to predict.
In the April survey of nearly 400 U.S. finance professionals, 40% expect the current crisis to end and business to return to normal in the second quarter of the year, 35% expect it to pick back up in the fourth quarter, and 17% said it would be 2021 or later before business returns to normal.
Given that uncertainty, the small and midsize companies have taken several steps to address revenue concerns, including layoffs by some. A monthly report of U.S. private payrolls by ADP shows that 20.2 million people lost jobs in April. Other than a smaller decline in private payrolls in March, the ADP report showed increases in 118 of the previous 119 months, dating to early 2010.
The Sage Intacct survey showed that a majority of employers had not made, or were not considering in the next three six months, permanent staff reductions:
- 64% said their workforce would remain the same.
- 18% said they were completing or considering completing a layoff of up to 25% of workers.
- 11% said they were completing or considering completing a layoff of more than 25% of workers.
- 7% said they planned to increase staffing.
The hospitality industry was the hardest-hit, with 20% of respondents in that sector reporting a total shutdown of business. In the ADP report, leisure and hospitality accounted for 8.6 million, or 42.5%, of the overall jobs lost.
The three most pressing concerns for the Sage Intacct respondents were revenue impacts (70%), cash flow and funding (62%), and continuing operations under social-distancing guidelines (44%).
The investments that finance professionals plan are tied to adapting to a world with more remote work: 31% said they are purchasing or expanding the use of videoconferencing systems, 24% said they are installing virtual private networks and security software for remote access, and 21% said they are purchasing or expanding the use of cloud-based systems for accounting, HR, or other functions.
— Neil Amato (Neil.Amato@aicpa-cima.com) is a JofA senior editor.