Covid-19: 80% of business leaders suggest significant downturn

Organizations 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 new ACCA (the Association of Chartered Certified Accountants) 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 percent of business leaders suggest their organizations are facing significant downturn in expected revenues and profit year-on-year, with 21% of organizations—2,083—already freezing recruitment.

You can read the report here or at https://www.accaglobal.com/us/en/cam/coronavirus/covid19-globalsurvey.html. ACCA 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.

This research aims to understand the business and financial blows to organizations so far from the viewpoint of ACCA’s members – finance professionals working in a wide range of businesses and organizations. American organizations large and small, in the public and private sectors, have expressed deep concerns about the impact of Covid-19.

In the United States, the research found that:

· Results showed 61% of firms have performed financial reforecasts since the Covid-19 outbreak, and 74% of those who have done so are now expecting negative growth in 2020.

· The virus’ impact saw 58% of firms reveal employee productivity has been negatively affected, 26% said they were deferring new product launches and 28% reported cash flow problems.

· Only 17% of firms surveyed believe the US’ economic stimulus package has been effective.

· Positive findings from the survey showed 70% of firms had business continuity plans in place to help them effectively respond to and mitigate the risks of the Covid-19 pandemic.

Warner Johnston, head of ACCA USA, said, “This research aims to understand the business and financial blows to organizations across the country. It is seen through the lens of ACCA USA’s members – finance professionals supporting a wide range of businesses and organizations at this hugely difficult time. The findings gauge the short. to medium-term implications, while also looking at the measures being undertaken and considered by organizations to mitigate the damage. It also looks at what lessons we can all learn from the pandemic.”

Jamie Lyon, the report’s author, said the American findings were broadly consistent with the global picture and highlighted the importance of business continuity planning.

“Everyone is hurting, but particularly the smaller organizations. Financing and cash flow are concerns to everyone, but even more so for small organizations. 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.”

He added, “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 organizations’ commitment to ensuring the health and wellbeing of employees, customers and other stakeholders first and foremost.”

The global survey 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 organizations 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.

Johnston highlighted crucial advice for firms to follow in these unprecedented times, adding, “We are recommending that organizations 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 organization; and Anticipate the business impact and future trends.”

ACCA is holding a webinar on the 16 April 2020 to discuss these findings, which will be published in full on April 27: http://accamember.newsweaver.co.uk/invitation/1586s9wf53w. The survey—of 10,000 accountancy practitioners globally and including 100 in the US—ended on March 26.

ACCA also launched a Covid-19 Hub, which includes useful resources to help organizations deal with the impacts and implications, including advice for ACCA members in practice and in business, students, and a section on well-being: https://www.accaglobal.com/gb/en/cam/coronavirus.html