Conversations surrounding financial savings and cutbacks are resounding with greater force as the lockdown continues with threatening uncertainty. Investments are declining, and money, for the most part, is being massively directed at saving lives, producing medicine, and procuring food.
When a pandemic of such stature grips the whole world with its high mortality rate, the initial reaction is to plug the issue then look at the economic destruction it brings on everyday businesses. Even though governments and nodal agencies are announcing economic policies, companies are struggling to maintain costs and support end-to-end processes.
Deloitte’s recent global report titled Covid 19: Managing Cash flow During a Period of Crisis highlights a survey that was jointly conducted by Tsinghua University and Peking University. The survey estimates that 85 percent of small and medium-sized enterprises (SMEs) in China will run out of cash within three months, and two thirds would run out of money in two months, if the crisis does not abate.
The report further amplifies that “the impact on businesses will extend far beyond China” and may affect “businesses that appear to be in good financial shape” as well. Citing immediate response measures to this global challenge, Deloitte urges company leaders to “think like a CFO across the organization”, especially to ensure that working capital gets precedence over operations and customer service – a real twist from routine practice.
As a countless number of organisations are still working from the backend, routine financial operations need to be inspected closely and carefully so as to avoid any kind of liabilities in the coming months. Making a financial plan to regulate the organisation’s business vitality and continuity is key to not only to the company’s own survival but also the protection of employees’ jobs.
Payroll is the singular main factor that defines this financial wellbeing. It’s where the money is spent to make more money. Companies grappling with profitability cannot ignore the implications of payroll mismanagement if it’s not seriously undertaken. Even if businesses are terminating, retrenching or furloughing staff, there needs to be accountability in the way employees are treated, taxes handled and questions answered.
Outsourced payroll business partners, equipped with experts and experience in handling legal undercurrents of every financial decision on employees, are specialists who can help companies weather any kind of financial pitfalls. As the Deloitte study points out, “In the current abnormal business conditions, smart companies are shifting their focus from the income statement to the balance sheet”.
With employees being the centre stage of all businesses, their payment and wellbeing is of primary importance to their CEOs. Having an internal team to manage their finances would be a cost-ridden affair given the situation and economic downswing. The advantages that an external payroll agency can bring is way more in tune with scenario-planning than succumbing to losses through taxes and missed deadlines.
Sweeping employment reform and surplus funding announcements across labour categories are also turning payroll complicated, making the presence of an external auditor invaluable and practical in all ways.
Employee Mobility Solutions companies ensure that companies cut their coat according to their cloth and not take on additional expenses at a time like this. While so many employees are getting helplessly laid off, interim hiring is more a fair response to employment when the economy is financially starved.
Beating Covid-19 and the financial instability it has brought about will depend on how businesses can make cost-effective decisions. Reducing scale does not only apply to operations, inventory and supply chain. It also translates, as the aforesaid study mentions, on “how much attention you pay to finance”.
