Why accountancy matters in a crisis
ICAS CEO Bruce Cartwright CA explains why now is the
moment when CAs really come into their own, helping businesses navigate the COVID-19 crisis and come out the other side fighting fit
By now, we will be well into the new normal. Financial planning, scrutinising the details of the road ahead, is under way. We’ve already demonstrated our adaptability: it’s incredible, for example, how many people have adjusted so quickly to working from home, with all the mastering of cutting-edge technology that often necessitates.
But while we are all social distancing, it doesn’t mean we don’t require social engagement. Businesses need to engage with other businesses right now, just as individuals need to interact with their community. Engagement has never been more important, at both a corporate and personal level.
This is the time for us all to come together for the greater good. There have been, and will continue to be, a series of welcome announcements of support to businesses and the workforce. Business has been demanding that it be rapid, but by its nature that needs to be followed by fast clarif cation in terms of delivery. With many others we have been calling for clarity as a matter of urgency. ICAS is doing its best to help with that connectivity with interactions with members and firms, governments, business and other bodies.
We have all been surprised by the speed and enormity of what we are witnessing. If there is one truth that has been reinforced in spades it is that good health is never more front of mind than when we are in danger of losing it. We are all humbled by the large numbers in our workforce (paid and volunteers) who are taking personal risks on behalf of us all. In some cases, the ultimate sacrifice. We owe them a debt of gratitude. It may be that, as we come out of this, there will be some revision of what our society truly values.
I can recall a few recessions in my business life but never a situation where governments globally have taken collective action to mothball large swathes of their own economy. In doing so there are so many businesses where the door to the customer is currently sadly closed. So, my second truth would be that cash is king; it is the no cash, no matter how much we might like to debate accounting policy.
Many businesses in survival mode have a desperate need for the return of some form of normality within a manageable timescale. I wouldn’t pretend to know when that will be, but I do believe that those we trust to make these decisions on our behalf are aware of the significant trade-off between managing the virus and reintroducing free trade.
This certainly feels like we are entering the deepest recession in our lifetime. Let’s hope it is also the shortest and we can move on to dealing with its legacy – part of which will be newly learned work practices that will in some areas transform how we work.
One fact I do notice this time around that was perhaps not so prevalent in previous recessions: the accountant as an adviser is as much swept up in the lockdown storm as any other business. They are advising clients through these difficult times while equally impacted in their own business.
The phrase “we are all in this together” has never been more true, corporate as well as personal. And in the frontline of UK corporates, our colleagues are in many cases adapting at pace, taking hard decisions and addressing very real survival issues. That’s the harsh reality.
This is why accountants matter in a financial crisis – and matter even more coming out of one. Accountants are conduits for information and translation, not only for understanding what’s available and how to access it, but also helping owners and managers work through their options.
.Accountants are uniquely placed to have an overview of any business because they get to see all the different moving parts and translate them into financial implications. Whether as a CEO, CFO, financial controller or an adviser, accountants understand the business levers that need to be pulled.
They can say, “This is the outcome of doing X and Y, this is the impact on your cashflow, this is the gap, and these are the options to bridge the gap.” It is not just about the numbers. The accountants I know all care deeply about those employed in their businesses and I know from many conversations in the last few weeks that they understand and care about the impact of their decisions.
Behind every employee there are dependants and a personal story. The welfare and mental health of these employees and their families is at the forefront of many of my recent personal discussions with accountants in leading business roles.
Yes, the scale of the current crisis is enormous, the contribution that so many are making is hard to comprehend but there is something powerful in being in this together.
We all have a part to play. And you can be sure our profession will play its part in helping us all get back on our feet.
This article first appeared in the May 2020 issue of CA magazine.