The pandemic has been a difficult time for everyone, with healthcare systems, financial sectors, and economies taking major hits. Numerous people had been laid off from their jobs and many companies were forced into closure due to quarantine measures and disruption of supply chains.
Because the effects of the pandemic is far-reaching and complex, the accounting profession was not spared. After all, the Covid-19 pandemic took a toll on multiple industries in the Philippines. Clients from small enterprises to large corporations were lost or placed in a financial bind as businesses closed temporarily or permanently, people lost their jobs, and entire industries collapsed.
What were the challenges?
These are the challenges that the pandemic resulted in, some of which were unprecedented because the novel coronavirus brought the world to unchartered territory:
- Changes in loan agreements for businesses
As a lot of businesses struggled at the onset of the pandemic because there was no income due to lockdown. As a result, many lending institutions updated their lending policies and loan stipulations, which in turn may have affected the businesses that had taken out loans pre-pandemic. This created domino effects on books of accounts for many companies, with accountants having to work on updating books to match updated rules and agreements.
- Loss of clientele
Just as businesses closed, so did their corresponding accounts. This meant a loss of income for accounting firms that relied on the corporate entity clients as these pay much higher. As a result, many accounting professionals also faced difficulties regarding their stream of income as numerous business deals were cut off.
- Working remotely
The accounting profession heavily relies on the paper trail as a means of verification and substantiation for transactions. The lack of in-person work negatively contributed to this. As a result, companies had to adapt by investing in online work platforms to allow individuals to carry out work from home without fear of contracting the virus. However, some firms still run out of corporate offices provided that health protocol is observed.
- BIR regulations
The pandemic resulted in many changes in BIR regulations to accommodate for temporary business closures to changing of deadlines to modifying rates. These tax incentives and breaks were created to help businessmen cut their losses due to pandemic and to stimulate the economy.
What lessons were learned?
Despite the debilitating effects of the pandemic, there were still many lessons learned. After all, the most growth happens during trying times. Here are some nuggets of wisdom learned from this pandemic:
- Preparedness is key
The pandemic has forced shifts and updates in traditional accounting processes. Many companies had to step up to the multiple challenges brought about by the pandemic. This exposed the importance of preparedness and readiness for just about anything and everything. Accounting firms and professionals must be flexible enough to adapt to necessary changes. While rigidity is part and parcel of the accounting process, we must not be so set in our ways that we forget to adapt to the changing world.
- Dangers of over-reliance on physical paper trail
Traditional accounting methods rest heavily on paper receipts and invoices. However, because the pandemic created a major shift in retail and direct selling, most purchases and transactions were forced to take place in an online setting. This emphasized that amid changing times and the fourth wave of industrialization brought about by technology, it is not enough to rely solely on a paper trail and it is indeed possible for transactions to safely be done online. Firms and professionals must learn to adapt to the recording of online receipts and invoices.
- Technology in accounting is the next big thing
One key lesson is the importance of technology in the field of accounting. All around the world, numerous software, applications, and platforms are being put up for accountants and financial professionals to utilize. Moreover, because of the pandemic, more businesses are realizing that they can, in fact, carry out operations online, leaving most transactions with e-receipts and e-invoices. To keep up, accountancy professionals should be on the lookout for new technology that will aid in the practice of accounting. The accounting process should never be viewed as stagnant, as it must evolve with the times and cater to the needs of the individuals and entities it stands to serve.
If you need help setting a system, auditing your books, or making sure your company is compliant with the ravages brought on by the pandemic into your operations, we can help. Our team of accountants can help your business get back on your feet and setup measures to pandemic-proof your operations. Let’s take the lessons learned from this crisis to grow your company. Call us for a free 30-minute consultation.