ACCA: Covid-19 Most Severe Impact Is from Cash Flow Hitting Business Viability

Organisations large and small, in the public and private sectors, have expressed deep concerns about the impact of Covid-19 on their people, productivity and cash flow, according to a recent survey conducted by the Association of Chartered Certified Accountants (ACCA).

The most severe impact is from cash flow hitting business viability, and while government stimulus packages have been introduced in many countries, most respondents said it was too early to say how these would make a difference. 80% of business leaders suggest their organisations are facing significant downturn in expected revenues and profit year on year, with 21% of organisations are already freezing recruitment.

The main findings show:

• 57% (globally), 54% (ASEAN), 53% (Vietnam) - Employee productivity negatively affected
• 37% (globally), 44% (ASEAN), 47% (Vietnam) - Cash flow problems
• 29% (globally), 38% (ASEAN), 52% (Vietnam) - Customers stopped / reduced purchases as they as they are from a region affected by the virus
• 24% (globally), 28% (ASEAN), 26% (Vietnam) - Having to defer launch of new products or services
• 24% (globally), 30% (ASEAN), 41% (Vietnam) - Customers stopped / reduced purchases as their supply chain has been disrupted
• And 53% (globally), 64% (ASEAN), 71% (Vietnam) of organisations have been able to do a financial reforecast (forward-based insights), in response to the fast-evolving scale and duration of the Covid-19 pandemic alongside the extent of necessary social distancing controls put in place by governments, which have created uncertainties for businesses.

During this time of extraordinary challenge of Covid 19 outbreak, as a leading professional body, ACCA is committed to providing resources to support our members and wider community. We’re also working to provide ways for you to share your knowledge, experiences and expertise.

Over 10,000 finance professionals across the world responded, in which 1,513 from ASEAN and close to 300 from Vietnam. In Vietnam the survey was launched in coordination with CFO Vietnam and VACPA.

In term of public practice, the research finds challenges mixed with opportunities:

• Challenges: 40-50% (globally), 58-77% (ASEAN) – Inability to meet reporting deadline and Pressures in completing services during peak period due to employee mobility issues correspondently; 30% (globally), 44% (ASEAN)- Increased audit risk rating to valuation of assets, completeness of liabilities or going concern issues
• Opportunities: 15-30% both globally and ASEAN have opportunities to assist clients in digital transformation, supply chain management, business continuity improvement, as well as tax compliance and advisory

Apart from Covid19 impact, the research findings gauge the short to medium term implications, while also looking at the measures undertaken and considered by organisations to mitigate the damage. Name a few: providing employees with flexible work arrangements (e.g. working from home), adjustments to remuneration and employment models, establishing supply chains in areas less affected by the outbreak, negotiating with banks and debt providers on debt service repayment obligations, and implementing an operating cost reduction strategy.

The research also looks at what lessons we can all learn from the pandemic. ACCA and partnering organisations recommends that organisations follow the ‘three As’ of crisis planning – Act to respond in a sustainable manner and focus on employees and stakeholders; Analyse the different information sources to secure your organisation; and Anticipate the business impact and future trends.

T.N (Vietnam Business Forum)