Large corporations and SMEs discuss work scenarios to ensure business continuity and reduce losses in the context of the spread of COVID-19 and the measures taken by authorities, according to ACCA, the Association of Certified Accountants.
Accountants and financial directors regularly update their financial plans to ensure the necessary cash flow. A large number of affected companies implies the possibility of losing some jobs, a reduced production and an unstable economic environment. The impact of COVID-19 on the economy will be felt even in the second half of the year.
ACCA estimates that all companies will be affected, but SMEs are the most exposed. The expertise of accountants and financial experts will prove increasingly important.
“The members of our association, accountants and financial directors, are at the forefront. They administer, take protective measures and advise management teams to identify solutions to maintain financial stability in a period of very much change. A correct estimation of Covid-19’s financial implications and associated risks will allow optimal measures to be taken. The financial managers are now the ones to call to provide clear directions in troubled times,” said Andreia Stanciu, Director of ACCA – South East Europe.
Strategies for SMEs
ACCA estimates that for SMEs this is one of the most difficult periods in recent history. They are forced to adapt to an uncertain environment, in an accelerated change. Small and medium-sized companies receive many tips during this period, but they must choose the right solutions for the type of business operated. SMEs are under pressure from larger companies, suppliers and have difficulties in dealing with staff.
As an advantage, smaller companies can adapt more easily after a shock. In addition, some SMEs are closer to communities, and informal collaborators can contribute to recovery. “Late payment is the most serious problem now. Financial experts play a key role in identifying funding sources at present and in the near future,” says Aleksandra Zaronina, Head SME Professional Insights ACCA. SMEs are now analyzing suppliers more closely and by geographical or sectoral coverage.
The quality of communication with staff will be another key element for survival and recovery. Many of the employees are parents, and during this period they have to juggle work tasks and family care.
Strategies for large companies
For large companies, the problems are just as serious in the context of stock market and currency depreciation, border closures and cessation of supplier activity. The biggest risk comes from closing some factories, with an effect on the supply of products and raw materials.
“For large companies it is difficult to make estimates. Actions are based on a multitude of scenarios, constantly updated, “says Clive Webb, ACCA Senior Professional Insights Manager. According to him, companies are looking for flexible ways of working, this is a good time for innovations in human resources policies. “This is an important argument for intensifying digitalization. The large number of employees who work from home, however, also implies possible cyber security issues, ”adds Webb.
It is important for companies to understand what their weaknesses are, because diminishing demand will have a cascading effect on all levels of a business.
“Companies should make cash flow estimates for three to four months, taking into account possible demand reductions of 25%, 50% or 75%,” says David Hutcheson, Managing Director Glen Abbot and specialist in possible pandemic scenarios. “Financial scenarios help you understand where you will be most affected and where you should start cutting costs.”
ACCA specialists also point out that the current situation is at the center of the human factor (diseases, closed schools, different work programs), which is why large companies must pay special attention to HR policies.