Accounting for Covid-19 in Your Financial Reporting

The current pandemic, as well as the ensuing lockdown and travel restriction measures, are an unprecedented event in our era, and something that nobody could have predicted the extent of. 

The decisions that were taken and the measures adopted to protect everybody’s health in the past months have been beneficial for the health system, but it has lead to a complicated situation for small and local businesses. If you manage or own a business, understanding the relationship between the pandemic and your financial reporting is vital to help you to navigate through this year, as well as offering you valuable insights.

Covid-19 and Its Implications on your accounting statements

As you will know, Covid-19 quickly spread across Europe. As it spread, the governments quickly implemented rules that would help contain the virus and preserve the health of as many individuals as possible.

This came with many problems for the economy. As countries started to close their borders and flights halted, the travel and tourism industry took a significant hit. But, the travel industry is not the only one to be affected. Among the ones suffering the worst consequences of Covid-19, the industries of transport, retail, and entertainment have also hit a record low in many years. This virus has had a deep impact on many industries and as such, considering the consequences is necessary for a clear vision of the future prospects of your business. 

Keeping your accounts and projections up to date

In order to consider the impact of Covid-19 on your accounts and future prospects, you should endeavour to keep all of your financial statements up to date. By managing your financial statements and accounts and regularly updating them, you can:

  • Highlight where you can cut your costs
  • Highlight growth opportunities
  • Identify your profitable and unprofitable customers
  • Evaluate your costs, identify any contracts that could be renegotiated or cut altogether
  • Plan for future changes that might occur 

By understanding where your business is in terms of finances, you can be better prepared for the changes as they unfold. Unfortunately, no one knows what the future holds at the moment, and the changes that are happening are doing so quickly and often without warning. 

We can help you to keep your financial information up to date. As well as ensure that you are getting the right support from the selection of Government handouts. 

Leveraging The Help, That’s Available To You.

In these unprecedented times, the government are doing what they can to help small shops, stores, local businesses, and hospitality venues. Since the second lockdown was announced, the government have begun to announce extensions to the schemes already in place to support businesses. At some point in the future, you may be asked to show how your business was adversely affected by the situation, so your financial records are very important when deciding whether to take up the government help. Having up to date financial information will help you to make a decision on the right course of action to support your business and choose from the options that are available to you at the moment. 

New announcements are being made daily, the following support is to be made available during this next lockdown:

  • Self-employed grant up to 80% of trading profits – not the original 40%
  • Businesses can apply to banks for government-backed support until January 31st
  • Furlough Scheme is extended until March, with businesses receiving 80% of employees wage
  • Businesses forced to close will be eligible to receive a grant of up to £3,000 per month – the grants will be based on business rates

It is a sensible idea to hire a professional accountant who can help you navigate through the steps of compiling a report, identifying the strengths and weaknesses. Additionally, such professionals can help you choose the best action plan as well as advise you on the options available right now for your business.