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The Accountants of COVID-19

The Business Finance Guide met with perhaps the most unlikely heroes of the coronavirus pandemic – the accountants. Performing a vital but perhaps uncelebrated role, the accountants of COVID-19 have advised and supported businesses large and small through the incredible challenges of the last six months. We learned that not all first responders wear blue.

Meet the team

We interviewed three ICAEW Chartered Accountants that have been on the front line. We’d like to introduce:

Harri Lloyd Davies – Partner at Bevan Buckland LLP

Joanna Drinkwater – Managing Director at Grant McKnight

Tasnim Mustafa – Owner at Barnes & Scott

accountants of covid-19

Businesses nationwide have felt the effects of COVID-19, and it’s reported that 48% of UK businesses have recorded a lower turnover than they had expected to have achieved by this point in the year.

Business Finance Guide: What was business like before the pandemic hit?

Harri Lloyd Davies: Honestly it was fairly buoyant. Most of our businesses are based in the southern part of Wales, and on the whole, the majority I think were doing pretty well.

Certainly, retail was having a tougher time last year – that’s been a trend everywhere. We work with a big range of businesses both in the public and private sectors here and most of our other sectors were fairly buoyant and going relatively well.

Joanna Drinkwater: Prior to COVID-19, business was really positive. As part of our offer, we give all of our clients a level of support where we are always at the end of the phone to answer their questions. It’s vital to our business.

We have that strength of relationship with our clients and rather than leave them concerned about asking a question for fear of it being followed by an invoice, they know that we are here to support them whenever they need additional help. It proved to be really beneficial as soon as lockdown hit in March 2020.

Tasnim Mustafa: It was very much business as usual, and all quite positive. We were growing revenues from a good base of clients. Our success is very much a functional outcome of our clients’ success. We deal with a lot of R&D tax credits for our clients, so while they all continued to innovate, business was going from strength to strength.

According to the latest Business Impact of Coronavirus (COVID-19) Survey, 41% of businesses currently trading described having less than six months’ cash reserves, with 35% reporting having more than that. Worryingly, 4% said they had no cash in reserve at all.

How did you help businesses respond to the challenges they faced as a result of COVID-19?

Harri Lloyd Davies: The challenge came when the phone just started to ring constantly. The initial shock of lockdown hit our clients, who are people we’ve come to know. It was really testing.

Then, very quickly, government support started to come through. Every time the Chancellor stood up and announced a new scheme, the phone rang. Understandably, everyone was trying to work out what CBILS and BBLS and the VAT deferral meant for their business. We were learning about all of the schemes as they happened too, then trying to support all of our clients with making the right choice and accessing the support.

In the late spring, the senior team here at Bevan Buckland had probably the most challenging six to eight weeks of their careers, just in trying to respond to that avalanche of queries and provide support.

We had to very quickly learn new ways to work and communicate with our clients. We didn’t do many webinars as a firm before lockdown. We learned how to do it, and in that eight-week period we used webinars and our website to make sure we were getting out all the information our clients needed as quickly as possible.

Joanna Drinkwater: It has been a real tough journey, there’s no doubt. Almost as soon as lockdown had started on 23rd March, we were inundated with calls. What became apparent very quickly was that there was a lot of government support for businesses.

During March, April and May, new news was being published or announced daily. The sheer volume of information was becoming too much for our customers to handle.

We moved quickly and began by sending our clients and networks daily updates. We summarised the latest government support available and explained in plain English the new developments. We described what each solution meant, how it could be managed and how our clients could apply.

As a result, all of our clients kept us busy with applications for grants, furlough and CBILS, and support with cashflow forecasting and management.

Tasnim Mustafa: Interestingly, the pandemic didn’t stop some of our technology clients from growing. Our clients that work in and support e-commerce grew in May and June at the height of the government lockdown. When the government took measures to speed up the payment of R&D tax credits for businesses, this enabled us to support our clients at greater speed.

Conversely, for our clients that were more affected by the pandemic, our industry became led by the news almost overnight. I remember every time that there was an update from the Chancellor, we’d be inundated with phone calls from clients in terms of what this meant for them. We spoke internally about the need to support our clients through a really difficult time and decided to administer our clients’ furlough applications for free, simply because we all felt that it was the right thing to do.

What are your thoughts on the government support that was on offer?

Harri Lloyd Davies: The challenge I think was that all of the government schemes were put together at incredibly short notice. Financial products can take months and even years to develop. It’s very easy to say with hindsight that some solutions were flawed, but the government schemes have meant that people have stayed in business who otherwise couldn’t have.

All schemes have parameters. There’s been a lot of conversation about businesses that have done well, or not done well as a result, but honestly, we were surprised by the sheer scale and level of the Government’s support and that had a real impact on a very local level.

When the furlough scheme kicked in, we saw small companies that were forced to consider laying off long-term staff now not having to make that choice as a result of furlough.  We were particularly fortunate as our local business were also supported by the Welsh Government schemes as well.

Joanna Drinkwater: I think the way that the Government created and managed some of the schemes – especially within the timescale they did and given the size of the task that they had – was fantastic.

For example, I remember vividly being told on a Friday afternoon by HMRC that the furlough scheme was going to launch on the following Monday. The guidance was delivered, and I had the whole weekend to get up to speed so I could help clients apply from 8am Monday. I really admire the Government’s speed and efficiency in turning around the schemes and the grants.

As a chartered accountant, I’m part of the ICAEW West Midlands and Birmingham committee board. We meet up regularly as fellow practice owners to discuss the latest updates and issues. Throughout lockdown, we had a consensus that the furlough scheme wasn’t working as effectively for some of our clients, so the ICAEW was able to feed that back to the Treasury and later assist it in creating and implementing the new Job Support Scheme.

Tasnim Mustafa: The scale of the government schemes was massive. I think it was bigger than we all expected it to be.

Our industry is quite niche, and the Future Fund was a really important scheme to help technology businesses. We’ve seen smaller private investors holding back throughout the pandemic, while the larger VCs continue to invest. But the Future Fund, as well as the expedited payment of R&D tax credits, made a big difference.

What’s your best advice for businesses planning for the next 6–12 months?

Harri Lloyd Davies: A business’ number one priority should be to continue to seek the best advice and guidance they can. In the early days of lockdown, we saw more people than ever seeking out financial advice and, as a result, they found many of their businesses were in better order than they thought.

As we’re a more local firm, we have relationships with our clients, we know them. I think as we continue to go through COVID-19 and ahead of Brexit, it has given us that human quality as an adviser to our clients.

There is massive uncertainty about the next six months. My advice would be, “don’t put off big decisions”. Nobody knows the level of government ability and appetite to keep supporting business yet. Make sure that you continue to have the conversation with your advisers and accountant and stay vigilant.

Joanna Drinkwater: I’ll go with the very well-used notion that ‘cash is king’. Cashflow management not just important but essential, not only to survive but potentially thrive. I’d suggest this to any business, anywhere at the moment.

To get through the next six days, six months or six years, businesses must have some form of cashflow management in place. That doesn’t need to be in the form of expensive software or paying thousands of pounds a month for a chartered accountant to be a virtual finance director. It could be as simple as a sole trader understanding what their incomings and outgoings are, when they’re due to be paid, and when they are due to pay out expenses.

If a business understands its cashflow requirements and can forecast the peaks and troughs, that will highlight immediately where and when they may need additional support.

Tasnim Mustafa: It will be a year of working capital solutions next year. We’re currently working on a survival guide for businesses and the most important point we make in it is about just how vital cashflow is.

In terms of the industry that we specialise in, I think we’ll see smaller investors return (with caution) maybe after the first quarter of next year. We continue to get enquiries in terms of the Enterprise Investment Scheme and tax relief for investing in businesses, which is really positive.

I think we’ll also continue to see a progressive attitude from the larger investors. For the businesses themselves, managing cashflow will be absolutely vital to surviving the next 12 months.

What’s the best thing about being an accountant?

Harri Lloyd Davies: As an accountant in practice, the exposure to a range of businesses and sectors is really great. That’s what I love. In tough times like the ones we’re going through, the array of skills that you learn as an accountant are vital for businesses. You often see accountants progress towards leadership and becoming CEOs of businesses because of the skills that they have gained.

Joanna Drinkwater: I’d say the best thing about being an accountant right now is being part of a worldwide community. Without the support of my fellow accountants and that regular communication with my accountancy network, I wouldn’t be able to best advise a lot of my clients. As accountants, it feels like we’re all in this together. I’m able to easily reach out to other accountants based in my area, all over the country, and even all over the world to seek support. We’re all helping each other with latest government updates, we’ve got our own coronavirus hubs and we’re constantly logging on to webinars to get the latest government news and changes.

Tasnim Mustafa: It has been a really challenging year for everyone. I think the best thing about being an accountant this year has been the opportunity to support our clients through a tough time. Often, our clients needed much more than just our support with their cashflow, or furlough and CBILS applications. We were here for our clients and people at a very human level.

Personally, I love what I do. To see a start-up business make it is really rewarding. I think the pandemic helped people to see great value in their accountants and as an industry we were duty-bound to step up. My wife are both working from home during the pandemic, splitting childcare and some very late evenings between us. It was all worth it. 

As we embark on a second national lockdown, it’s more important than ever that UK businesses seek the advice of a trusted expert when it comes to their finances.  Small and medium-sized business owners can get a free initial no obligation consultation with an ICAEW Chartered Accountant like Harri, Tasnim or Joanna through the ICAEW Business Advice Service.

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