Martin Findlay CA: Creating order out of chaos
By CA magazine
29 April 2020
As businesses plan for life after COVID-19, Martin Findlay CA, Office Senior Partner at KPMG, talks about the crucial role that CAs can play to steer companies through the challenges ahead.
COVID-19 has ripped up financial forecasts along with supply chains. The need for calm scenario analysis and informed decision making has never been greater. Today, planning, flexibility and the ability to innovate are crucial.
The speed at which job losses are happening, compared with the 2008 financial crisis, makes this seismically different. But what 2008 taught me is that some businesses only had a cursory understanding of the risks they were facing. In 2015, oil prices plummeted; then when the Brexit vote happened and the exchange rate dropped overnight, businesses that thought they had a hedge for an exchange position didn’t have a deep enough understanding of the risks.
As a consequence, we now have a better knowledge of the headwinds. But a lot of businesses won’t have modelled disaster scenarios where contracts are cancelled and supply chains halted. The short-term answer, however, is not necessarily what’s right for the long-term sustainability of the business.
A good relationship makes a huge difference when it comes to challenging decisions.
The starting point for finance professionals is to develop a deep relationship with a business leader to understand the dynamics, business model, politics and the various drivers. Without that knowledge, it’s difficult to sit shoulder to shoulder with them to solve problems. You need to be authentic and challenging. A good relationship makes a huge difference when it comes to challenging decisions.
To get back on the upcurve following a downturn, you need to be able to supply working capital as well as work out how to grow your business and provide funding in a sustainable way. Similarly, if a business needs to reduce its unit overhead cost base, but also needs all its overheads, then it needs to expand its offering, maybe do some acquisitions or mergers, or look at some non-core disposals.
What clients don’t want is somebody who is working from a textbook. They want proper advice that they can trust and implement.
What business looks for is people who have broad experience, because experience is what informs good decision making. A good CA is likely to have encountered all manner of business experiences, whether through advising clients or as a company accountant. Along with their training, and the common sense they’ve developed along the way, it allows a CA to draw on the expertise of the people around them. What clients don’t want is somebody who is working from a textbook. They want proper advice that they can trust and implement.
In our case, we have deep specialists who can help businesses modernise, adapt and learn new ways of thinking, but also mitigate risk. To give one example, there are options to defer tax payments around COVID-19 – not just the ones articulated by Chancellor Rishi Sunak, but also the ability to spot activity that qualifies as R&D and can benefit from state subsidies. It’s about knowing which levers to pull. Companies will also need people who can spot cyber attacks – there is so much scope for fraudsters around COVID-19, beginning with emails that purport to come from HMRC.
Also, many business leaders don’t like being bombarded with introductions to people who might someday – potentially – be of some value. They look to relationship partners to mobilise the right specialists at the right time. When we get that right we add more value to the business. It’s a win-win.
Companies are facing lots of challenges but sometimes that brings out the best in them. Even mobilising people to work from home has been a huge task in itself
If you think of generalists on the one hand and specialists on the other, since 1987, when I entered the tax profession, there has been a consistent trend towards specialists. Tax became a specialism, then personal tax became a different specialism from corporate tax. You’ve got IT consulting, then you’ve IT projects where you’re affiliated with large IT houses. You have specific consultants who deal with supply chains. As the world becomes more complex there is a necessary evolution. Some roles didn’t exist when I started. KPMG has had to adapt to be relevant.
KPMG is also evolving. We’re about to move into new offices in Aberdeen, just a stone’s throw away from where the company was founded more than 150 years ago. Symbolically it will be like a rebirth. There has been a lot of talk about Aberdeen being an oil and gas city and those fuels being in decline. But Aberdeen has a rich history beyond oil and gas. We’re investing in life sciences, we have a vibrant food and drinks sector. We’re not going anywhere and it’s a good time to go into a new home and re-energise the team.
Companies are facing lots of challenges but sometimes that brings out the best in them. Even mobilising people to work from home has been a huge task in itself. But everyone will learn a lot more about their business and their people, and form deeper relationships as a result. We won’t have all the answers, but there will be opportunities as well as challenges that arise from these difficult times. Does that make it a more interesting time to be doing what we do? Yes, it does.
This article first appeared in the May 2020 issue of CA magazine.