Accounting professionals are working against the clock to share expertise and provide guidance to help clients navigate a way out of the crisis.
Specialists around the world are collaborating across Praxity – the world’s largest alliance of indepedent accounting firms – to help companies reset, restructure and restart.
The International Labour Organisation estimates working hours will decline by 6.7 per cent in the second quarter of 2020 – the equivalent of almost 200 million jobs being lost. The response from governments and public bodies has varied from country to country, with little global consensus on how best to support businesses.
In contrast, the Praxity response – where independent accounting firms pool knowledge to support clients anywhere in the world – has been truly global. It shows how international collaboration can help companies overcome business challenges at local level.
In every region of the world, Praxity member firms are helping business leaders:
- Manage cash flow
- Access government support packages
- Meet tax and legal obligations
- Prepare business continuity plans
- Implement business recovery measures
- Adopt new ways of working
Member firms have developed emergency response task forces and resource centres to help companies navigate the crisis. They have also been working across international borders to ensure clients continue to operate as effectively as possible.
In Southeast Asia, where the pandemic spread first and peaked earlier, one of the first priorities was helping companies complete audit and tax obligations. This required a high degree of inter-firm collaboration.
Roy Lo, Managing Partner of ShineWing Hong Kong, explains: “We have clients in many different countries but we cannot travel to them. We have relied on member firms to provide on-site support in countries such as Malaysia and Singapore to help our clients finish their audits in time. The support from member firms is fantastic.”
Independent accounting firms are helping companies around the world mitigate the economic impact of the pandemic.
Let’s look at the key support areas:
Cash flow and loans
For many businesses, especially small to medium enterprises, the biggest challenge so far has been managing cash flow and accessing government support to survive and recover.
Andy Ryder, Corporate Finance Partner at Shorts in the UK, explains: “In these exceptional times, clients need the support of a trusted advisor to both act as an external sounding board and give them expert advice on how to access the government support mechanisms.”
He adds: “We have taken the long-term view that we should be there to help our clients and therefore we have invested in remaining fully operational and assembling a Covid-19 team who can expertly guide our clients through the government support available. We believe this investment will hopefully reap long-term benefits for our clients as we continue to help them navigate to the ‘new normal’. We expect cash to tighten as normality returns and therefore our expertise in assessing working capital requirements and sourcing funding will be a key benefit to our clients.”
Tony Farmer, Head of Corporate Finance at Praxity member firm Garbutt + Elliott says: “It is important that businesses have access to practical and realistic guidance on what is available. The economic ramifications of the pandemic are immediate and significant. Therefore, it is vital we work together to take decisive action to help businesses facing hardship as a result of the outbreak.”
In the UK, the Garbutt + Elliott team is helping businesses in the Yorkshire region apply for small business and “bounce back” loans, “easing the burden and helping them to understand what is available and how to best apply”, Tony explains. As well as supporting businesses with their conversations with banks and funders, the team is providing valuable guidance and support with the preparation of accounts, cashflow forecasts and viability statements. For those companies unable to access government loans, the team is introducing clients to alternative funders and funding options.
Firms across the Alliance are exchanging information on government assistance to help clients with international operations.
Andy explains: “We have been approaching member firms overseas to offer support to any of their clients who have UK-based operations and who would benefit from the government support schemes. In addition, the Shorts Covid-19 website hub has been shared by Praxity to assist any members requiring information about the support available in the UK.”
Tax and law
More than ever, companies need up to date information on tax and legal obligations, both domestically and internationally.
Mazars, the largest firm within the Alliance, has launched a comprehensive global tax and law tracker to help companies access and understand Covid-19 legislation and tax measures anywhere in the world.
Created by tax and legal experts from 75 countries, the interactive tracker is designed to assist managers in developing strategies to protect employees and enhance business stability during the crisis.
Across the Alliance, independent accounting firms have been working tirelessly to provide clients with guidance on fast-changing regulations and tax measures, and their implications.
To ensure member firms have the most up to date information to impart to their clients, Praxity Executive Office has published a high-level summary of government actions by location within the G20. The resource provides country by country summaries of tax filings affected, employee wages benefits programmes and loan programmes, country by country.
The Organisation for Economic Co-operation and Development (OECD) is also providing regular updates on tax administration responses and other Covid-19 responses.
As the impact of Covid-19 becomes more apparent, companies need to restructure and do things differently. Member firms across the Alliance are enabling the transition.
ShineWing Hong Kong is among the firms leading by example. Having forecast a significant drop in initial public offering (IPO) activities – a key area of business – Roy Lo has developed a new business model.
The firm’s new focus is on restructuring deals and sales of distressed asset, and not surprisingly given the severity of the crisis, liquidations. To enable the change, Roy is upskilling staff, increasing the use of online platforms for communication and information sharing, and investing in new technology and skills.
ShineWing Hong Kong is now helping clients adopt a similar robust response based around new technology, including the use of digital platforms, blockchain and AI, supported by webinars and online workshops.
Roy says it is “imperative” to move with the market and continue to invest in technology regardless of the current business environment. He believes the impact of Covid-19 will accelerate digital transformation, adding: “With more business moving online, clients need resources to invest in IT technology, and they need to change staff because many do not have the skills. They need to upskill.”
However, despite the explosion in home working, he does not see the need to reduce office space as countries emerge from peak pandemic. Instead, he suggests traditional offices “could be repurposed for different functions such as converting to leisure areas for staff, creating more co-working spaces and multi-function rooms”.
Policies and processes
Praxity member firms are also helping companies implement changes to policies, processes and procedures. Plante Moran in the US has published a useful guide to workplace readiness, new safety protocols and business continuity.
Written by consulting partners Daron Gifford and Dave Plomin, the guide states: “Clearly, the health and well-being of your people are the highest priority as you restart or ramp up your operation. You’ll need to review and implement new human resource policies, processes, procedures, and infrastructure in rapid response to changing circumstances and regulations.”
The Plante Moran Partners highlight the need for “tight coordination” between human resource, supply chain, and technology teams to maintain daily operating procedures. This should be supported by comprehensive training plans covering health and safety processes, and communication plans covering staff, customers and suppliers. They stress: “Changes are only effective if they’re well-communicated and adopted consistently.”
In terms of workplace readiness, companies are urged to focus on core processes and “determine where digitization, automation, and data analytics can be used to promote social distancing, eliminate manually intensive processes, and improve productivity.”
The future: collaboration is key
As countries and companies emerge from the crisis, what will the future hold? Much will depend on government action and public pressure for change.
Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), says there needs to be a new focus on “global solidarity” for recovery and resilience of the planet.
Writing for the Organisation for Economic Co-operation and Development (OECD), she urges governments to deliver a global protection fund, support the poorest of countries and fill coverage gaps in lower to middle income developing nations where people face destitution.
While this may help address global inequalities exacerbated by the pandemic, it doesn’t address the immediate challenges facing businesses, their people, customers, suppliers and other stakeholders.
This is where Praxity comes in, facilitating global collaboration to provide essential tools to help companies respond to the crisis in the most effective, most resilient way.
“It is the right time for member firms to work together more closely, and work with online platforms to support our clients,” Roy says. He stresses the importance of being able to partner experts in different territories and in different specialties to help clients do business internationally.
Pooling expertise in this way exemplifies how Praxity is empowering business globally. But working collaboratively isn’t just about helping clients find route one out of the crisis, it’s about providing a way forward for stable and sustainable business.
This article was originally written for Praxity Global Alliance, the world’s largest alliance of independent accounting and consulting firms. I have updated it for my website.