Could accountants be the SME heroes of Covid-19?

Starved of customers, burdened by fixed over-heads, and plunging deep into the unknown, many small and medium sized companies suddenly found themselves in terrifying new territory as the lockdown measures introduced to control the spread of the coronavirus began to hit business hard. Service providers such as banks, accountants and landlords have been under pressure themselves, coming to terms with staff working remotely and an influx of new government support schemes to service. Systems have often come close to breaking point, leading to standard holding messages like “Sorry it’s taking us longer than usual to answer your call” becoming the norm. The existential threat to SMEs is obvious – and was highlighted in research we conducted in May across 1,000 SMEs. We found that one in five are not confident that their business will survive post Covid-19 restrictions and a third believe that business will take more than a year to return to pre-crisis levels. And yet despite this, the majority remain optimistic about the future. We set out to understand better what inspires SMEs’ confidence, and where they have benefited most from external advice. Accountants prove their worth As a trusted source of information, service providers have given vital advice and support to SMEs, guiding them through access to available assistance and helping to plan for an uncertain future. In this area the key ‘go to’ advisor has often been their accountant. Amongst service providers, our research found that accountants have been more helpful, more available, and more proactive in supporting SMEs through Covid-19 than others such as banks, landlords and payment providers. Many accountants have provided useful passive information (things like a self-service online Covid-19 information hub or service level update emails) but the really helpful ones have gone beyond that to actively recommend courses of action. These include how to boost or manage cashflow through accessing funding, grants, relief schemes, suggesting diversified services to offer to customers, and advice on how businesses can adapt to the changing environment, for example through the use of contactless and online payments. While there have been lots of positive stories of accountants offering their support, this has not always been the case. Some businesses have clearly fallen off the radar with one in five SMEs reporting no communication at all from their accountant since the start of Covid-19 restrictions. This is especially the case with the smallest businesses, the sole traders up to those with fewer than ten employees. These micro businesses (and there are a staggering 5.6 million of them in the UK) are also less likely to reach out themselves to their accountants. It’s important therefore that accountants - and the wider professional services sector - do not leave these small players to suffer in silence and fend for themselves. Image restored? Overall, however, the coronavirus crisis seems to be something that has helped restore the image of the accountancy profession. Rewind a few months to pre-Covid, and the reputation of the sector had hit an all-time low. Highly publicised audit failings on the part of the Big Four meant that regulatory eyes were firmly on the sector and, in particular, its big players. The legions of smaller accountancy firms and individuals supporting SMEs may indeed have felt hard done by, fearing a hit to their own reputations by extension. Now though, it is clear that the great majority of these grass roots accountants have been proactive in their support of SMEs, and have been rewarded by an uplift in how they are viewed by their clients. The really important thing now is to build on this momentum and keep providing essential support to clients. So, how should accountants be helping SME’s as lockdown measures are slowly lifted and Britain cautiously begins to re-open for business? Five focus points as lockdown lifts Firstly, and it sounds obvious, but make sure you really know the situation facing all your clients. We know that small business operators are resilient but the “sit tight and hang on” approach of many cannot be considered a viable strategy. It is time for accountants to ask searching questions, listen hard and even to dispense some tough love. Secondly, help provide the immediate “roadmap” to exit Coronavirus measures. This could include advice on areas such as short-term planning to fund impending furlough tapering, budget forecasting for planned redundancy, and revisions to business plans for reduced capacity due to social distancing measures. Thirdly, SMEs will need solutions and support for the long term. Surviving the next few months is one thing, rebuilding for longer term success in a ‘new normal’ is another. This will involve building financial resilience and contingency plans for dealing with a potential second wave. Fourthly, responses should be tailored to differing sector needs. Small manufacturers, for example, will be able to manage the social distancing of their workforce in the factory more effectively than those in the hospitality and construction sectors. And, although the 2m social distancing guidelines may be reduced in time to 1.5m/1m, accountants still need to consider appropriate funding solutions for investment in new equipment such as screens and new systems such as contactless payment, as well as providing guidance on updating and simulating alternative business break even models. And finally, if you have heard nothing from your SME clients do not assume that all is well. Pick up the phone. Larger, higher revenue, SMEs may naturally be the focus of your attention but they will have more in house resources to fall back on, so don’t forget the micro businesses where better management of cashflow and debt can make a vital difference to their future. Cara Berry, founder and director of Biznography Limited