Small and medium sized entities (SME) are most vulnerable to the impact of the global spread of Covid-19. This is of great concern, as they are the backbone of most economies - a vital source of energy for the communities in which they are based. It is therefore absolutely vital that we support SME leaders at this particularly challenging time.

As trusted advisers to SMEs, small and medium sized practitioners (SMPs) are at the forefront of this support, best placed to help SMEs rapidly transform and adapt to the changing circumstances - for instance, helping clients apply for financial support being made available by many governments. More than ever, SMPs are instrumental in providing the assistance urgently required.

The international SMP community is mobilising, demonstrating their readiness to give a hand to SME sector: the support includes organising webinars, virtual sessions and newsletters guiding SMEs in risk, cashflow management and broader transformation. This is an impressive example of collective action, and we encourage ACCA SMP members around the world to get involved even more actively sharing their best practice of crisis management.

As members of the ACCA SME Global Forum, we would like to share some of the insight on the crisis management situation that we recently faced running our own businesses and working with SMEs.  

Rosanna Choi FCCA, chair of the ACCA Global SMP Forum, partner, CW CPA, with offices in Hong Kong SAR and mainland China

Taking a ‘people first’ approach

My accountancy practice went through the first wave of the Covid-19 outbreak, as we have offices both in Hong Kong SAR and mainland China. We started feeling the impact in late January/early February, right after the celebration of the Lunar New Year. Most if not all of our staff in mainland China went back to their hometowns, and they were not allowed to return to the cities where our offices are based for quite some time.

Our first priority was to ensure that our staff were safe, give them confidence that we would protecting their workplaces and provide all necessary support. We were also aware that some of those working from home had children and were having to show extra flexibility to adjust to their life situations. We shipped laptops and all the necessary equipment to those who working remotely in mainland China. We also implemented additional measures to ensure sanitary supplies were available and procedures were in place for staff working from Hong Kong SAR and mainland China offices.

This was the moment when reinforcing the bond with our employees and comforting them in the moment of uncertainty was more important than ever. Our actions helped to significantly improve morale. We set up daily team catch-up meetings to make sure everyone received the necessary guidance and to ensure we were able to distribute the workload within the teams more equally. Despite turbulent times, we still needed to comply with the reporting deadlines of our clients and we could not compromise on the quality of our work, as the price of that would be too high.

Those challenging times brought our teams even closer together, helped us become more innovative and flexible, more tech savvy and definitely more resilient. Our teams are showing flexibility and motivation, understanding how important their support is to keep their small business clients afloat and how much their loyalty matters for us. Working intensively together helped us improve the efficiency of work. For example, we completed the preliminary audit work that was crucial for one of our clients in two weeks instead of the usual two months.

We also thought it was important to share our experience of crisis transformation and lessons learnt with and our SME clients. So we launched a regular newsletter for them - both with general advice and specific information such as the latest governmental support available. That was a real success and reinforced a sense of a strong community.

Despite all the efforts, we do understand that there are challenges. Because of all the supply chain issues our customers tend to delay their payments and I am sure SMPs are facing similar issues in other countries. Luckily our firm has always had contingency funds so we can deal with the current situation. We also realised the importance of “not putting all our eggs in one basket”, and all the efforts taken earlier on in terms of diversification are paying off. Our clients are very diverse in terms of both industry and also geography. While we are all facing unprecedented situations now, we can turn challenges into opportunities. It is very important to think of your staff first because if our teams are strong and healthy we can do magic.

Gabriel Low FCCA, working with SMEs in Southeast Asia, based in Singapore

Looking at supply chains, cross border movement of goods and labour, and risk management

Singapore, where I am based, is a city economy and a real-life example of dependency on other countries. Raw materials and 300,000 workers commute to Singapore from Malaysia every day. Malaysia closed its borders for several weeks to contain the spread of Covid-19. Supplies of raw materials were allowed to flow to Singapore by exception, but this could be interrupted in the future by an extended shutdown in Malaysia. Such potential restrictions will also further impact the supplies of both raw materials and fresh products to Singapore.

This reminds us why diversifying sources of supply for SMEs is critical. Companies may need to put in place emergency ‘non business as usual’ actions, such as suspending the usual purchasing policies. These pragmatic actions will aid speedy decision-making to secure limited sources of raw materials from other sources.

It is also crucial to review the approaches to supply chain management. We see empty containers stuck in the ports as the flow of goods in and out is stopped. All shipping relies on a balance of trade in both directions. The last few weeks have shown a severe trade imbalance, with SMEs involved in logistics and international trade heavily impacted.

SMEs should continually revise their business continuity plans and focus on risk management. The immediate issue for SMEs is liquidity. Central banks and governments in some parts of the world are putting funding in place for small businesses and providing trade guarantees to allow working capital to flow again. Blunt instruments like interest rates cuts, tax rebates and other stimulus will not solve this short term liquidity crunch. If you have no cash, you have no cash.

Managing your exposure to sharp fluctuations of exchange rates, caused by de-leveraging, is one factor to bear in mind. This is particularly important for SMEs operating in emerging markets and commodity-export-driven economies. Interest rates are another important concern. Governments around the world are taking measures to decrease long-term interest rates to support the economy. However, the experiences of previous financial crises in ASEAN shows that the short-term liquidity crunch could cause sharp rises in short-term interest rates, and this could negatively impact the bottom line. SMEs should formulate a strategy to manage these exchange rate and interest rate effects, and those exposed to short-term loans should review their business continuity plans.

Accountants who can reach out to their colleagues across the world to learn best practices are instrumental in supporting their SME clients in developing those business continuity plans. 

Vivian Liu FCCA, accountancy and advisory practice, China

Continuing to provide audit services through the disruption

During the past two months, the impact of Covid-19 on SMEs in China was significant. Due to the prevention measures implemented by the government, many SMEs could not carry out normal operations, many had to temporarily shut their companies, and many were facing cashflow difficulties that impacted their ability to cover fixed costs and pay salaries.

We faced a growing demand from our SME clients for advisory services, which had to be performed by our employees remotely. We faced greater challenges in providing audit services due to the absence of  suitable technology for remote working – such as cloud-based services – and the large volumes of data that needed to be processed presented difficulties for the audit process, compounded by the restrictions in movement of people.

Auditors are usually engaged from December to May, and recruitment of auditors during the quarantine period was highly challenging.

Heather Smith, Anise Consulting, Australia

Sharing remote-working and Covid-19 advice via social media

I regularly update my global network with practical advice of Covid-19 crisis management via my LinkedIn profile. As a technology and lifestyle accountant, I have been running a cloud-based practice for over a decade, sharing methodologies, business strategies and work-life balance practices through the podcasts, newsletters and books. I have also shared my experiences of remote working in a podcast specially prepared for the ACCA during these challenging times. I also host a ‘support chat’ for the global accounting community every weekday afternoon at 4pm Brisbane time (AEST). Register to join.  

Eilis Quinlan, Quinlan & Co Chartered Certified Accountants, Ireland

Providing updates to SME associations on government support

In Ireland, we are already seeing concrete examples of the impact of Covid-19 outbreak. The schools are closed, people are asked to stay at home unless it is essential to leave, all the hospitality and restaurants sector is closed. Our clients are facing significant issues with supply chain disruptions, and some businesses have serious liquidity problems due to massive closures. I am a board director and treasurer of Irish, Small and Medium Enterprise Association (ISME) and we provide regular updates on the governmental support available, and on other practical information relating to Covid-19 and the impact on businesses. The role of SME associations across the world in informing businesses of available support schemes is more important than ever; and  SMPs - also now, more than ever - have an important mission to guide their SME clients through the support schemes and related procedures to be followed.

Eriona Bajrakutaj, Major’s Accounts, UK

Navigating SMEs though the government support packages

SMEs are facing significant consequences from the Covid-19 outbreak in the UK. As SMPs, we must get close to our SME clients and provide them with the best guidance and advice we can in this uneasy situation. Members of ACCA’s Practitioners Network Panel are working closely fellow SMPs and with ACCA on the measures that are needed to support small businesses. The UK government has introduced a generous package for SMEs, and it is our task now to navigate our clients through those opportunities and related technicalities. We are also seeing an unprecedented collective movement of SMPs mobilising to support small businesses and share best practices with peer practitioners.

Hastings Mtine, MPH Chartered Accountants, Zambia

Looking to other regions for best-practice government response

The Covid-19 wave is just coming to Zambia and Africa as a region, but we can already see the  impact on the informal SME sector, such as micro traders that relied on supply of goods from China. We also see the overall slowdown in the inflow of goods to our country. Our government has not yet taken any concrete steps to support the small businesses that will be impacted by the Covid-19 outbreak, and we are keen to learn about the measures taken in other countries, including via the ACCA network of international peers.

If you would like to share your best practice stories of SME crisis management that would support the ACCA SME community, we encourage you doing so by submitting a short outline or a video story to Aleksandra Zaronina, ACCA’s head of SME Professional Insights.

ACCA’s Global SME Forum is a group of experts representing over 15 countries and a wide range of professional backgrounds – from finance institutions, academics and professional advisers to entrepreneurs themselves. It represents the sector’s needs at a global level, contributes to ACCA’s technical and research work on issues facing SMEs and the accountancy profession and facilitates the sharing of best practice.