August 5, 2020

Lessons learned: How an accounting and insolvency firm took on COVID-19

The human touch and an agile response put two very different firms in the driving seat.

The human touch and an agile response to COVID-19 have put two very different professional service firms in the driving seat for uncertain times ahead. Their actions may point the way forward for other SMEs.

As soon as Sydney accounting firm Enspira Financial knew a COVID-driven lockdown was approaching, CEO Craig Stanmore had his workforce call clients to check on their wellbeing. “Given the SME makeup of our clients, we knew some would be in trouble immediately,” he says. Sure enough, the firm was soon busy advising many of their clients on how best to respond to the new environment.

Yet this all happened as the accounting firm faced its own challenges. “We didn’t know if we would receive any remuneration for that, and most of our normal work went down to a trickle – corporate services stopped overnight and compliance work was delayed,” Stanmore explains.

Acknowledge challenges and change

The firm pushed on nonetheless.

In practical terms, Stanmore says Enspira Financial’s first priority was to help clients preserve cash, pivot their offering and carry out some scenario planning. However, while the firm had always had a cash flow and CFO offering, it needed to adapt its business advisory services to further support the vast number of struggling businesses.

This called for intensive external and internal training of staff, Stanmore says, to ensure everyone – from all parts of the business – were better able to pivot or expand their roles, “so, for example, our receptionists could support the compliance team”. Stanmore himself went from being a full-time CEO to doing tax claim and stimulus work.

The results were a standout. “We hadn’t encouraged people to be agile before, so it was gratifying to see how quickly everyone adapted,” Stanmore says.

Keep an eye on the bottom line

And in the meantime, things looked up for Enspira Financial on the money side. Reluctant to charge clients initially, the arrival of the Federal Government’s JobKeeper wages subsidy for businesses meant the firm was comfortable with billing clients once more.

“Even though it took five or six weeks to kick in, JobKeeper allowed clients to get on the front foot a bit and we were able to start invoicing for some of our work,” Stanmore says.

Look for your own opportunities

For Melbourne-based insolvency firm Rodgers Reidy the scenario was rather different. As COVID hit, liquidation numbers in fact fell by around 40 per cent compared with the previous March.

The reasons? A culmination of the Australian Tax Office’s freeze on debt collection, a moratorium on personal liability for insolvent trading and an extension of time for compliance with statutory demands. While good news for many, for Rodgers Reidy it meant challenging times ahead as, without the pressure of the ATO and other creditors demanding payment, few businesses were encouraged to seek insolvency advice. Work came to a grinding halt.

However, Director Shane Cremin wasn’t deterred. He saw the changed circumstances as an opportunity to shift the firm’s focus. After all, many businesses still faced serious underlying issues – particularly given Australia’s terrible pre-COVID bushfire season – and something needed to be done about them.

“We’re having a lot of discussions about … how companies can use this time on relief packages to look at their business model and get their affairs in order,” Cremin explains. “We’re advising on informal and formal restructuring so companies can remain viable in recovery phase.”

Plan, adapt, review

Both Cremin and Stanmore believe it will take at least 18 months for the COVID fallout to settle and for the national economy to start growing again. That makes forward planning essential. As Cremin says: “Businesses are [then] ready to make the right decision as circumstances reveal themselves.”

The insolvency firm is following its own advice, putting staff in place for the inevitable spike in traditional work that will arise when the government winds back its financial support.

Enspira Financial, meanwhile, is already benefiting from its forward thinking. Its proactive approach in calling clients straight away has seen it retain most of its clients and gain many more.

“Most of our growth is from recommendations,” Stanmore says. “There was also an uptick in international clients through our [accounting firm association] Allinial Global.”

Make wellbeing a priority

While Enspira Financial and Rodgers Reidy have found a silver lining in difficult circumstances, neither have been immune to the huge psychological pressures of the current reality faced by both their staff and their clients.

Cremin says his firm is proactively addressing the issue. “We’re training staff on how to handle their mental health by becoming aware of the indicators and acting early.”

Enspira Financial has been similarly proactive. With two tax seasons blending this year, the firm closed its office for a week. As Stanmore says, he insisted the teams have a proper break between seasons. “They need to disengage their minds from it all.”

Ana Marinkovic – Making the most of holiday trading

Ana Marinkovic – Making the most of holiday trading

29 November 2023

The holiday season shopping flurry can offer some small businesses the opportunity to prosper… and others a time to take stock for the new year. Both call for careful preparation – particularly in the current environment. NAB Executive Small Business Ana Marinkovic shares her top tips.

Ana Marinkovic – Making the most of holiday trading