Navigating the Financial Impacts of COVID-19
Like most of you, we’ve had to make dramatic changes to our practice in the face of this pandemic. In addition to the significant changes to patient care, we’ve had to reevaluate how we run the business and think critically about what we need to do in order to remain viable for the long-term. How we manage finances is at the top of that list.
When our state began shelter-in-place orders on March 23, we reached out to our Certified Public Accountant (CPA), not knowing what this uncertain time would mean to us financially. With her guidance and resources from the American Optometric Association (AOA) and other industry organizations, we started looking at ways to hold onto cash and secure business lines of credit. Although we are typically debt-averse and pay for everything in cash, we knew we needed a safety net of some kind given the uncertainty of the situation. Our CPA and several colleagues concurred that we should resist the urge to put personal assets into the practice and find as much outside cash as possible to sustain us through the unknown number of months ahead. To mitigate the disruption to cashflow, we unfortunately had to furlough the majority of our staff.
Shortly after our closure, the governor declared a state of emergency due to the growing cluster of positive Coronavirus cases. That opened the door to apply for Economic Injury Disaster Loan (EIDL) funding through the Small Business Administration (SBA). Then, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed, and we were able to apply for those funds and the Paycheck Protection Program (PPP). Knowing the initial round of funding would be exhausted quickly, we shopped a couple of banks we have business relationships with to determine who was best prepared to help us navigate the application process. We chose a small regional bank who assigned us a very responsive point of contact in the SBA lending division.
Managing the incoming funds and ensuring they were allocated appropriately was a bit daunting. We found a very helpful spreadsheet on the AOA website that allows detailed line item tracking of PPP expenses. You enter the initial loan amount into the calculator and it divides the funds into two buckets, 75% for payroll expenses and 25% for approved non-payroll expenses like rent and utilities. The calculator allows you to enter each expense as a line item, with drop-down boxes to assign the type of expense (payroll or other, with specific categories for “other”). Totals on the calculator update after each expense is entered so you have a running tally of how much money has been spent in both the payroll and non-payroll buckets and how much remains.
Our state was one of the first to get stay at home orders, and they have just been extended. Until we return to routine care, we are navigating utilization of our PPP funds while also keeping social distancing practices. We hope to take advantage of the extended downtime to train staff using telework hours to balance in-office time. As conditions continue to unfold, we are also being mindful of holding onto cash and being thoughtful about all expenses.
With these changes come feelings of unease and uncertainty for many of us. As I see it, communication is paramount during this time—with colleagues who are experiencing similar challenges, and with staff whose jobs have been impacted. We have found when we are candid with our staff about the financial situation we are in and discuss what we are doing to keep them and our patients safe, they feel more positive and confident about returning to work. They understand that while it can be tough to separate emotions from critical decision making, these changes are necessary to ensure the practice is still available for patients and staff on the other side of this pandemic.