The future viability of smaller firms has been brought into sharp focus as the pandemic continues, finds ACCA’s research report 'Covid-19 global survey: inside business, impacts and responses'.
The research shows the severity of the pandemic’s effects, with continuity planning falling short across all sectors.
The global survey of over 10,000 ACCA members and stakeholders working in a wide range of organisations reveals the outbreak is particularly challenging for smaller organisations compared to their larger counterparts, with all sectors reporting distinct concerns about cash flow and growth.
Small businesses have a more pessimistic view than the largest organisations when considering both revenue and profit, compared with the previous financial year. Among business leaders of the smallest organisations, with fewer than 200 employees, 85% expect year-on-year revenue to be lower than the previous year, and 86% expect year-on-year profit also to be lower.
ACCA’s data shows almost one-third of organisations do not have appropriate business continuity plans (BCP) in place to respond effectively to the crisis. This is a particularly acute issue for smaller organisations, with 38% of those suggesting they do not have a continuity plan in place compared with 15% of firms with 1,000 or more employees.
Jamie Lyon, ACCA’s head of business management comments: ‘Not having a BCP can compromise the resilience of organisations’ management through the COVID-19 outbreak and could have significant implications for employees, customers, investors and all stakeholders connected to the organisation.’
Consistently, the biggest impact identified across every sector is reduced employee productivity. The public sector, at 69%, cites this issue most often, compared with 59% in not for profit, 55% in the corporate and financial sectors, and 50% in academia.
Cash-flow worries across the sectors vary: 39% say this is a concern in the corporate and financial world, compared with only 26% in the public sector. Again, cash flow, alongside broader challenges relating to reduced customer demand and supply chain disruptions, are more acute for smaller organisations.
Alex Metcalfe, head of public sector policy at ACCA adds: ‘Public sector finance professionals need to provide timely financial analysis, such as cash flow forecasts, to support the critical public services being delivered during this crisis. However, the research reveals that public sector members are less likely than peers in other sectors to have completed a financial reforecasting following the outbreak of the pandemic. The strength of the recovery will depend on rapid and effective government responses, with professional accountants having a critical role to play in supporting this response through the provision of timely information and analysis.’
When leaders were asked if they had performed a reforecast of their organisation's financial outlook for 2020, since the outbreak of Covid-19, only 35% in the public sector said they had, compared with 55% in the corporate sector and 47% in academia.
Jamie Lyon concludes: ‘Our report also reveals small but growing concerns about financing and debt obligations, which we could expect to rise in the coming weeks. The immediate picture is of focusing on short-term survival, which may worsen over the coming weeks and months. Many respondents see these issues threatening the very viability of their organisations over the next six months. The pressure will be on governments globally to sustain these organisations, and especially SMEs.’
The full survey can be found on ACCA’s website: https://www.accaglobal.com/gb/en/professional-insights/global-economics/Covid-19_A-Global-Survey.html
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