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Charles Sterck, CPA / Tax Principal in the RINA San Francisco office.
Charles R. SterckCPA /Principalview bio

How to Survive the COVID-19 Crisis

Businesses all over the country are impacted by COVID-19


The global impact of COVID-19 is clearly having a negative impact on the economy and business environment everywhere. The impact is universal. The crisis has contributed to a major decline in revenues for virtually all companies.  

Everyone must sit up, take notice, and plan to assess and address their risks.

Everyone must ask themselves…

  • Do we have a demand for our product and, if so, how do we deliver it?
  • How long can we sustain our business if nothing changes?
  • Should we close the business and, if so, when?
  • What’s was first thing that went -- or will go -- bad for us?
    • Our supply chain?
    • Employees?
    • What?

Answering these questions is key to developing a rational survival plan.

As we work out their strategy, we must remember that the most important thing in the businesses are the People, Product, and Process. How does this situation affect each of these most critical elements?

  • What can we anticipate happening this month? in 2 months?  6 months?  
  • What are we most worried about?
  • What income and resources can we count on?
  • What processes do we need to change so that they work for us during this crisi

If our company has articulated its Vision (more info) and identified Core Values (more info), we should ask what can we do today that is consistent with our Core Values and Vision? What do the Vision and Core Values say about the current situation?  What can the organization do today to support the Vision and Core Values? 

Whether our organization has formal Vision and Core Values statements or not, we should answer the above questions and prioritize them. What is the most important?  Each business will find different questions and actions more important. There is no time to waste!

For most organizations the key to staying alive through the COVID-19 disruption is ensuring adequate cash flow and general financial health. We should quickly assess the business’ basic status. 


  • What is our financial picture?
  • How long can we afford to make your payroll?
  • How long can we survive without staff?
  • What scenario is most likely and what does mean for our organization?

Here are two specific things to do NOW. 

1.    Ensure that our accounting system is appropriate.

We need to review the status of the organization’s accounting system. Do our processes and procedures still work when employees must work remotely?

With the COVID-19 situation, many industries cannot have employees coming into the office. For accounting staff using desktop software, it’s very hard to do work from home. In addition, IT staff may need to be physically in the office to support the users of traditional accounting packages. 

On the other hand, cloud-based software allows accounting teams to work from home with minimal impact on operations. 

In this pandemic most companies should have financial systems that enable remote work. If our organization is using a proprietary system, we need to confirm that staff can access it via the Internet or bring their computers to their home office. Or, we should consider migrating to a more flexible platform. 

If the business is using an off-the-shelf software like QuickBooks, now is the time to move to on-line accounting software. There are several cloud-based services to choose from including Xero, QuickBooks Online, Intacct, and others that provide full accounting software functionality in a secure environment. 

Whatever package we choose, we should share the live files with our tax and accounting provider. This can save the company quite a bit of hassle down the road.     

And if bill paying is an issue, it may be time for the company to look at a cloud-based bill payment process. is one option to investigate.  Above all, the cloud-based provider must offer great secure access and work in a way that is consistent with our organization’s needs. 

2.    Put numbers to the emotional questions

Many clients have called to talk about this COVID-19 situation and the overwhelming and everchanging landscape. They ask, “What am I going to do?”

Well … this question is too broad! 

Instead, at the beginning of this article there a number of specific questions for us to ask ourselves. The answers to the questions are the assumptions that we will use in building forecasts for the company’s survival.

Next, we should look at historical financials to use in forecasting the future. We should focus on cash and what it will take for our business to survive over the next several months. 

Based upon our assumptions about the state of our operations and the historical financial records, we should do the following:

Step One – Run a historical monthly income statement report from the accounting software detailing the revenues and expenses, by category for the year ended February 29, 2020. This means that once this report is run, we will have a spreadsheet with the months of March 2019 through February 2020 across the top (horizontally) and a detailed income statement listed down the left (vertically

Step Two – Review the income statement and determine if it is prepared on a Cash or an Accrual Basis. 
Because this exercise is focused on Cash, if we prepared the spreadsheet on an Accrual Basis, we must convert this statement to a Cash Basis format.    

Step Three – Copy the historical Cash Basis income statement into a new excel tab.   We will call this new tab “Forecasted Income Statement”.  

Step Four – Change the revenue numbers going forward to reflect the realities of our situation based upon our unique situation and the assumptions.    

To do this we will create a workbook tab and label it “Revenues”. Document the assumptions and calculations used for each line item. If a revenue line requires complex calculations, create a separate tab for them.

Link the expected revenues by revenue stream to the Forecasted Income Statement created in Step Three.

Step Five – Go through our expenses much in the same way as we did revenues.   We will need to work this line by line.  For example, if we have reduced our workforce, we will need to calculate the amount of payroll we will be responsible for going forward. With this new payroll will come changed employee benefits and the like. Document the assumptions and calculations used for each line item and also create a separate tab for each expense line item that requires complex calculation.

Step Six – Repeat step five for every line item in the income statement.

Yes.. this will take time, but it is not only necessary, but it is worth it.  

And if we are like most businesses, we will learn some things from this process that we would not otherwise discover. Often these moments of truth will cause us to go back and modify certain assumptions that we initially made.  

Step Seven  -  Track cash on a month-by-month basis using this newly created forecast.   

This will uncover realities for the future for us to address now.

As a result of our in-depth analysis we will have a forecast for our business that is based on our assumptions how the COVID-19 crisis will modify our historical financial results.

We could do more! 

We could do projections based on events that are more hypothetical – less likely to happen. But, a forecast using the most-likely scenario is essential in helping us to plan our next operational steps for the organization.

For further information or assistance, please contact Charles via email.

This content is prepared solely to provide general information to our clients and friends.  While having referred to and recommendations of products and services, we are in no way representing or endorsement any product or service mentioned. This content does not constitute accounting, tax, or legal advice, nor is it intended to convey a thorough treatment of the subject matter.

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