It's the time where every sector of the economy is facing an unprecedented economic crisis and giving an SOS signal to the government, investors and other stakeholders.
Whatever we're facing, it's not forever. It's only for the now. This, too, shall pass but definitely it will leave a strong impact on everyone in terms of current working, future planning and there is going to be a new normal after Covid-19.
In this article, we will see the impact of Covid-19 on finance departments and the changes that may be required for effective future working.
Relationship with the clients and vendors:
The vendor and client management task is going to change completely and forever in different formats like physical invoices & documents will be taken over by the digitally signed invoices & documents and the payments will be completely paperless, this will help in reducing the storage space and expenses on the printing and stationery. Most of the banks are facilitating the requester and approver mechanism where the accountant of the payment processing owner can place the payment request using his login credentials and the authorized signatory can approve the payment using his login credentials before the payment hit the bank statement resulting in eliminating the need to visit the bank.
This lockdown has taught us the concept of social distancing; new ways of business communication via audio/video conferencing. This will inflate our internet bills but surely reduce travel bills and save traveling time.
Relationship with the auditors
As the lockdown has promoted digitization and social distancing, auditors may discourage the on-premise visit for conducting audit except for the necessities. This will lead to more digital communication in the form of online information exchange creating new audit trails, difficult to understand and manage by most of the companies not familiar and aware of the latest technological and legal development.
Relationship with the Tax authorities
Government is the stakeholder in each and every organization in the country in the form of Income Tax, GST, Excise, VAT, custom and many more.
Introduction of E-assessment is the beginning. Post COVID-19, the dealing with the government departments will see a sea change and to protect the interest of the companies, suitable changes will be required by keeping in mind how things will play out in case of no physical contact with the revenue authority and the limited digital interaction may be recorded for the documentation purpose.
Like income-tax and GST, other departments may follow the complete digitization and eliminate the need for personal visits to the departments; a lot of emphasis will be required on maintaining proper documentation.
Normal Working of the finance department
Normally, when we think of the finance department, what comes to our mind? The answer is for sure files, files and more files. It is undeniable that record-keeping is one of the most underrated functions in the finance department but very crucial for the functioning of the department.
Working post Covid-19
COVID-19 has taught us the seriousness of the sanitization and the social distancing and this is most likely to stay forever. The only mantra is to follow 'Don't Touch' policy and avoid the most common touchpoints like files and documents as these files and documents pass through different hands. The same can be taken care of by the following ways:
1. Encouraging the email culture within and outside the organization.
2. Converting the physical records to the Digital records.
3. Attaching all the source documents with the respective ledger entry in the system (tally or other ERP most of them are supporting this already or with minimum customization) i.e. attaching the digital copy of the invoice to the respective expense entry, attaching the entire foreign remittance documents in the foreign payment entry. This will reduce the need to maintain physical file.
4. Excessive emphasis should be given for the simplification of the records so that the receiving person should be able to understand without or minimum help from the process owners.
5. Shifting the working of the finance department from people driven to the process-driven.
6. Carefully drafting and implementation of the Risk Control Matrix.
7. Process audit should be implemented and the violation should be taken more seriously.
Hence, proper planning and the changed approach will be required for the effective working of the finance department post COVID-19 under the leadership of the visionary finance controller.