Finance Director: 5 Tips to manage your SME out of lockdown

Finance Director

Covid-19 has fundamentally reshaped the UK’s economic landscape and there have been many casualties along the way. But now that the initial reaction phase is over, getting back to some sort of ‘business as usual’ offers a new set of challenges.

How can the Finance Director support the SME to get back on its feet?

  1. Flexibility planning

The budget is out of the window, now is the time to focus on scenarios, what happens if sales half…or double? Understanding your new market place, competitors and consumers is key to the actions that follow on. Then depending on the outcome, look at restructure, operational efficiencies and overhead reductions accordingly. An article I wrote on forecasting could help:

  1. Improve liquidity

Based on the scenarios look at cashflow requirements. Ensure credit control is functioning effectively, purchase efficiently and work with suppliers to agree terms. The Government is offering a variety of loans, grants and benefits and reliefs, can these be utilised? Revisit financing arrangements, can further cash be drawn down? Or a low interest loan be utilised? I refer to an article I wrote on improving working capital here:

  1. Managing the Team

With children at home for the next few months, there is likely to be a period of hybrid working with some in the office and some working from home. Ensuring that the teams are working effectively and productively in the period is paramount. Keeping on top of the reporting requirements is essential as is ensuring the health and wellbeing of the team. I wrote an article on ways to avoid zoom fatigue that may help:

  1. Stakeholder Communication

Ensuring that the wider business has the right information at the right time to make decisions. Ensuring that investors and lenders are kept in the loop about the business as they may be able to help. Ensure that employees are kept informed to ensure they still feel part of the team even when working remotely. Keep the lines of communication open with the supply chain to anticipate problems in supply, price changes or when customers change their orders.

  1. Manage risk and build resilience

Revisit your risk model and update with new knowledge as it arises. Your competitors may have adjusted to Covid-19 well and what can you learn from how they have adapted? Look to build resilience into the business, alternative suppliers, new sales channels such as E-Commerce and building an agile workforce. Many businesses have shown great innovation over this period, especially with their use of IT, and this could be the source of differentiation going forward.

Putting these steps in place will not only help you recover and survive from lockdown, but to potentially thrive. As Benjamin Franklin said “Out of adversity comes opportunity.”


Zoom Fatigue: Why am I so tired working from home?

Having finished a 2 ½ hour video call (my 4th call that day), I needed a lie down, I was exhausted. Now I believe Teams is great, it makes working from home, sharing, managing and communicating possible when we are in lockdown. But I wanted to understand why it can be so tiring and what we can do to make it easier.

Being on a video call requires more focus than a face-to-face chat, says Gianpiero Petriglieri, an associate professor at Insead. We have developed acute skills to read peoples non-verbal expressions, body language, tone and gestures face-to-face, and this comes easy for us. But video chats mean we need to work harder to give and receive these non-verbal cues, and paying more attention to these consumes a lot more energy.

Picking up these non-verbal cues requires eye contact which is difficult because in order to provide eye contact to the people on your screen, you need to look at your camera. In order to receive it, you need to look at their eyes on your screen. Laura Dudley, an assistant clinical professor of applied psychology in the Bouvé College of Heath Sciences, suggests that throughout the call, you and the other callers are toggling between screen and camera which can be incredibly taxing for the brain.

Lack of eye contact mean there is also an issue about picking up the cues for when to speak and this often results in people talking over one another. The opposite is also true that being unsure of when to speak means some people do not speak at all! We are programmed to minimise silences between contributors and technology delays heighten our anxiety and mess with the turn-taking mechanics of conversation says UX researcher Zachary Yorke.

There are also physical and mental demands of being on lengthy video calls such as being hunched over a laptop for long periods or anxiety about how we look on camera. There is no wonder we are getting exhausted from video calls!

So how can we alleviate this so called “Zoom Fatigue”?

  1. Limiting video calls to those that are necessary and building transition periods between calls. Try stretching, making a drink or doing exercise or video call from the garden or patio!
  2. Turning on the camera should be optional and understand that cameras do not always have to be on throughout each meeting. I tend to find that switching off the camera allows me to concentrate on the spoken word and avoid looking at myself!
  3. Yorke suggests, we should “encourage more balanced conversation, help others get their voice heard and remind them to pass the talking stick”.
  4. Having your screen off to the side, instead of straight ahead, could also help your concentration, particularly in group meetings, says Petriglieri. It makes you feel like you’re in an adjoining room and can be less tiring.
  5. It is worth considering if video calls are the best option. Making a telephone call avoids the need for our brain to multi-task and allows us space to take notes. Taking notes has been shown to increase retention, so well worth considering.
  6. Marissa Shuffler, an associate professor at Clemson University, suggests taking time during meetings for non-business chat. “Spend some time to actually check into people’s wellbeing,” she urges. “It’s a way to reconnect us with the world, and to maintain trust and reduce fatigue and concern.”
  7. Tips to look your best on camera and help your colleagues see your expressions:
    1. Illuminate your face with a window or other light source as this will avoid your face being in shadow if the light is behind you.
    2. Put your camera (or entire laptop) at eye level. Having it facing upwards from under your chin is not very flattering!
    3. Pay attention to the background. Having hanging washing behind you can be very distracting!

Video calls have allowed us to work from home and connect in ways that would have been impossible just a few years ago. Just look at what Joe Wicks has achieved with his online daily workouts! We just need temper our usage in order to harness the technology and reap the rewards!




Going Concern standard tightened

From next year businesses will need to improve their assessment of the going concern basis for financial statement preparation. This follows publication of the FRC’s revised standard in response to recent well-publicised corporate failures (Carillion and Thomas Cook etc) where the auditor’s report failed to highlight concerns about the prospects of entities which collapsed shortly after.

What is going concern?
A company prepares financial statements on a going concern basis under the assumption that they can continue operations for at least the following 12 months. It is assumed that the company does not have the intention, or need, to liquidate its assets, and the financial statements are prepared accordingly.

What does this mean for directors?
It is the responsibility of the company directors to provide an assessment as to whether the going concern assumption is appropriate.
For small companies this could include preparation of budgets, sales forecasts and a review of borrowing arrangements to ensure the entity can meet its obligations in the future.
For medium and large companies, the work would extend beyond that of small companies to include areas such as market/product/contractual risks and the timing of cashflows before they can conclude on the entity’s ability to continue as a going concern.

What do the changes mean?
The revised standard means UK auditors will follow significantly stronger requirements than those currently required.
This will involve work by the auditor to:
• more robustly challenge the director’s assessment of going concern and thoroughly test the adequacy of the supporting evidence.
• provide transparent reporting for large organisations on whether management’s assessment is appropriate, and to set out the work they have done in this respect.
• stand back and consider all of the evidence obtained, whether corroborative or contradictory, before drawing conclusions on going concern.

These changes are due to come into force from 15 December 2019 and going forward businesses will need to make sure they have a solid case for going concern.