A column by Head of ACCA Cymru Wales, Lloyd Powell
Throughout the spring and summer we have grown used to hearing bad news about business. And no wonder, as the country has suffered months of gloom on the health and economic front. But now as the leaves begin to fall, we can begin to see the possibility of economic recovery to come.
According to a monthly business barometer run by Lloyd’s Bank (the actual finance giant, not my own personal piggy bank), companies across Wales are growing in confidence. The index rose 19 points in August.
Of course we should treat such numbers with caution, particularly against the backdrop of last week’s continuing increase in Covid-19 cases across Wales, including the local lockdowns, and the new restrictions across the country, the impact of the unwinding of the furlough scheme, and on-going post-Brexit uncertainty. And in this case, the cold percentages don’t tell you that, despite the thaw in business sentiment, lots of struggling firms across all sectors are still scanning the horizon and searching for hope, and fearing for what may happen in the coming months.
But this might be an indication that better days might be on the way, and lots of Welsh businesses are planning for recovery and beyond – the ‘revive’ phase as it has been called.
That is certainly true at Robertson Geo, which employs 40 people in Deganwy, Conwy.
It isn’t a household name, yet it is a world leader in making high-tech products for customers in green energy, mining, coal, oil and gas all over the world.
Through no fault of its own, the business suffered amid the general global downturn triggered by Covid.
Now for the first time in a long time it is planning for growth rather than managing crisis.
It has kept its staff together through the dark days, thanks to its own resilience and ingenuity as well as £51,000 funding from the Welsh Government’s Economic Resilience Fund.
It is a great example of a fruitful partnership between private enterprise and Government which ACCA has long championed, supporting an SME which now has a global reach – the type of business that we all hope will thrive in the post-Brexit world.
It is also true at Transcend Packaging, Caerphilly, which has almost doubled its permanent staff by changing its production lines to make personal protective equipment (PPE) to help fight Covid-19.
The switch has protected more than 70 jobs, as well as the lives of frontline workers in the NHS and other key services.
These are just two of the countless SMEs that form a fundamental pillar of the economy in Wales and beyond. The World Bank estimates they make up 90 percent of businesses and more than half of employment worldwide.
According to Welsh Government figures for 2019, SMEs in Wales accounted for 62.4% of employment and 37.9% of turnover, with large enterprises accounting for the remainder.
Supporting these firms therefore makes sense from an economic development point of view, as well as supporting the crucial role they play in supporting jobs in communities across Wales.
Small businesses often benefit best from small accountants to guide them through the intricacies of finance, and in the last few months they have offered a crucial lifeline to a sector vulnerable to failure.
ACCA’s recent report, ‘Responsible SMP Pacesetters’, showed just how important small and medium accountancy practices (SMPs) are, and why they act as a safety net for businesses trying to rebuild their way through the pandemic.
The financial impact of the crisis has been immense, with many SMEs and micro-businesses struggling to survive lockdown with all its disruption to normal trading conditions, supply chains, labour and cashflow.
The ACCA report paints a picture of how SMPs have reacted with agility and innovation to help keep businesses afloat, all while facing similar challenges to their clients. They have served as a vital link between SMEs and the support available to them from governments, banks and regulators.
Other key points from the report reveal how smaller accountancy firms also contribute to the community in other ways too, including:
- Supporting the charity and NGO sector: SMPs make donations, fundraise and volunteer for charities, and also serve as honorary advisers.
- Promoting social mobility: SMP leaders promote accountancy as a progressive profession in schools and colleges, offering training and apprenticeships often to underprivileged or excluded groups.
- Financial inclusion and financial literacy: SMPs play a valuable role in fostering financial literacy among individuals and organisations. The adoption of digital technologies, in particular, is leading to a new era of engagement between SMP accountants and their clients, enhancing financial competence among small business owners.
- Sustainability and ethics: SMPs play a leading role in transforming SMEs into robust businesses, which behave ethically and responsibly. As trusted advisers, they can guide clients through complex reporting frameworks, carbon accounting and waste reduction, helping them become both economically and environmentally sustainable.
The report’s author, ACCA’s head of SME professional insights, Aleksandra Zaronina-Kirillova, said: ‘We really want to show just how vital small accountancy firms are to small businesses especially at a time like this. SMPs are a key part of the financial health system for the SME sector. They have proven to be the ‘emergency services’ to small businesses during the pandemic.’
At this crucial time for Wales, we can but hope that the signs of economic recovery are sustained and are not a false dawn, allowing accountants and financial professionals to focus their efforts, and those of their clients and organisations, on a sustainable recovery, rather than just economic survival.