Organisations large and small, in the public and private sectors, have expressed deep concerns about the impact of Covid-19 on their people, productivity and cashflow, according to ACCA’s new global research among 10,000 finance professionals.
The most severe impact is from cash flow hitting business viability, and while government stimulus packages have been introduced in many countries, most respondents said it was too early to say how these would make a difference.
Eighty per cent of business leaders suggest their organisations are facing significant downturn in expected revenues and profit year on year, with 21% of organisations - 2,083 - are already freezing recruitment.
This research aims to understand the business and financial blows to organisations so far from the viewpoint of ACCA’s members – finance professionals working in a wide range of businesses and organisations.
The findings gauge the short to medium term implications, while also looking at the measures undertaken and considered by organisations to mitigate the damage. The research also looks at what lessons we can all learn from the pandemic.
ACCA recommends that organisations follow the ‘three As’ of crisis planning – Act to respond in a sustainable manner and focus on employees and stakeholders; Analyse the different information sources to secure your organisation; and Anticipate the business impact and future trends.
Jamie Lyon, who led the research, explains: ‘Everyone is hurting, but particularly the smaller organisations. Financing and cash flow are concerns to everyone, but even more so for small organisations, with 40% of them not having a business continuity plan.
‘For many of us, the face of work has changed overnight. In the short term, leaders are facing a very difficult operating environment when it comes to employee productivity and engagement, alongside a number of compounding and wide-ranging challenges - stifled and stalled customer demand, supply chain disruption, people mobility issues, product and service delays or deferments, investment challenges and so on.
‘All this is of course translating to the financials being affected because fundamentally all of these blows are interconnected. But what’s heartening to see is many organisations’ commitment to ensuring the health and wellbeing of employees, customers and other stakeholders first and foremost.’
The main findings show:
· 57% - Employee productivity negatively affected
· 37% - Cash flow problems
· 29% - Customers stopped / reduced purchases as they as they are from a region affected by the virus
· 24% - Having to defer launch of new products or services
· 24% - Customers stopped / reduced purchases as their supply chain has been disrupted
· And only 53% of organisations have yet been able to do a financial reforecast, perhaps due to the fast-evolving scale and duration of the Covid-19 pandemic alongside the extent of necessary social distancing controls put in place by governments, which have created vast uncertainties for businesses.
Jamie Lyon concludes: ‘Overall the global data confirms Covid-19 is a huge challenge across all sectors and sizes of business, and regions and countries. The main issue is uncertainty, which affects the ability of organisations to plan properly, to react and to forecast appropriately. While talking of silver linings may be very hard at this time, we need to think about every opportunity, and to consider every option available to keep businesses large and small afloat.’
· ACCA is holding a webinar on the 16 April 2020 to discuss these findings, which will be published in full on the 27 April 2020: http://accamember.newsweaver.co.uk/invitation/1586s9wf53w
· The survey supporting this research closed on Thursday 26 March 2020.
· Please refer to ACCA’s Covid-19 Hub, which includes useful resources to help organisations deal with the impacts and implications, including advice for ACCA members in practice and in business, students, and a section on wellbeing. https://www.accaglobal.com/gb/en/cam/coronavirus.html
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ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
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