Business and government must follow the three As of Act, Analyse and Anticipate as they mitigate the damage of Covid-19, says ACCA
In a global policy report, ACCA argues its Covid-19 and global economic conditions surveys send a clear and urgent message to government across the world. According to ACCA’s new Covid-19 research, organisations across the world in the public and private sectors have expressed deep concerns about the impact of the crisis on their people, productivity and cashflow.
The most severe impact is from cashflow 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.
Some 80% of business leaders suggest their organisations are facing a significant downturn in expected revenues and profit year on year, with 21% of organisations, already freezing recruitment.
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.
However, the ‘three As’ are as relevant for governments and policy makers in responding to the pandemic crisis.
ACCA argues that governments must act to ensure businesses have the support necessary to overcome immediate cashflow problems caused by the shutting down of economies in order to tackle the spread of Covid-19.
Unlike previous financial crises, this pandemic poses very different challenges to previous wholescale economic shocks. Governments and central banks therefore need to think and act fast to mitigate the consequences as economies hit an emergency stop.
The report urges governments to avoid complacency. With one third of respondents unsure of the effectiveness of current government economic packages, policy makers must analyse the effectiveness of the measures they have put in place, in real time.
As the report says: ‘The economic impact of Covid-19 will be long lasting. Some businesses will be hurt more than others and, conversely, some will recover faster than others.
‘Government thinking in the mid-term response needs to anticipate what measures will need to be in place to support and enable viable businesses to recover. This will require both long-term thinking and mid- to long-term support to save jobs and enable a return to sustainable growth.’
ACCA’s key recommendations
- Governments must look to work closely with business and international organisations in delivering support packages which may need to be in place long after the pandemic has passed
- Financial institutions must do their part in keeping cash flowing to hard-hit businesses during their time of struggle
- Governments must do what they can to reduce the risks taken on board by large financial institutions, such as underwriting a proportion of lending, or by incentivising bank support for smaller businesses
- Governments must work together to develop national and international exit strategies that can support economic recovery post-the pandemic
- Those businesses, particularly the most profitable and least affected by the pandemic must expect to also work with their governments to do their part to save smaller businesses, who may be within their supply chains, from going under as a result of the crisis
Key finds of Covid-19 Global Survey
- 57% say employee productivity negatively affected
- 37% are experiencing cashflow problems
- 29% say customers stopped or reduced purchases because they are in an affected region
- 24% are having to defer launch of new products or services
- 24% say customers stopped or reduced purchases as their supply chain has been disrupted
- 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