As the UK government eases its lockdown restrictions, there is a sense that the country is slowly returning to normal. Yet continued social-distancing restrictions mean this is not the “old normal”, which existed before the crisis. Instead it is a “new normal” where certain business activities are still curtailed, many people continue to work from home, and those who return to the workplace find an environment that is significantly changed from the one they were used to before.
So, in this unfamiliar and uncertain situation, what are the main priorities of UK CFOs? In a recent videoconference, a group of senior-level finance professionals from the UK shared their perspectives. They explained that their greatest priorities include:
The 2-metre rule
The UK government is currently under pressure to relax its 2-metre social-distancing rule. The World Health Organization says that a distance of 1 metre between individuals is sufficient to minimise the chances of infection. Many countries — including China, Denmark, and France — are applying the 1-metre rule for social distancing, while others — including Australia, Germany, and Italy — are using a distance of 1.5 metres.
Certainly, application of the 2-metre rule is proving a headache for businesses in many sectors, including the hospitality industry. A finance leader for a brewery said the rule was problematic for his pub customers and is likely to render pubs in busy urban areas and those that lack beer gardens unfeasible venues if the 2-metre rule isn’t changed to 1 metre.
Yet even businesses that are largely office-based are wrestling with the issue of how they can effectively apply the 2-metre rule in open-plan workspaces where employees previously sat close to each other. The finance leader of a technology company said that his business would just allow a small proportion of its staff who want to work in the office to be based there initially. Another finance leader, representing a scientific organisation, said that his employer was looking at rotating teams. Organisations that are based in large office blocks face additional issues with regard to shared entrances, exits, and lifts.
Understandably, safety is a major concern for all businesses as they plan to welcome staff back to their workplaces. A finance leader for an infrastructure business emphasised the importance of creating working environments where people feel “psychologically safe”. His business already undertakes deep cleaning of its factories at the end of the day and plans to provide office-based employees with their own cleaning equipment and hand sanitiser. At present it has an issue on its factory sites because the personal protective equipment used to combat COVID-19 interferes with its usual safety equipment — for example, safety glasses are affected by masks. The business has its own team of mental health first aiders able to offer support to employees and is committed to staying in close communication with its staff.
Public transport is presenting issues for some employers, especially those based in London. The finance leader for a bank said that while staff may believe that their office can be made a safe place to work, they feel apprehensive about the prospect of travelling to their workplace.
While lockdown restrictions are easing, many organisations are still experiencing severe revenue pressures. Entire sectors, such as hospitality and tourism, continue to be starved of income. Meanwhile, other sectors face the prospect of earning significantly reduced revenues for the foreseeable future. Certain businesses that work for public-owned entities are being expected to supply services on a cost-only basis.
Given this context, it is not surprising that businesses continue to pay close attention to their costs. The successful switch to remote working earlier this year has led many businesses to start examining the break clauses in their commercial property leases to see if they can reduce their overheads by renting less office space.
Brexit is back
To date, the UK and the EU appear to have made limited progress in their trade talks. Furthermore, the UK government is reluctant to extend the Brexit transition period. This raises the possibility that by the end of the year, the UK will have left the EU without a trade deal in place.
Organisations are therefore currently planning for a “no-deal” Brexit scenario while wrestling with the ongoing challenges posed by COVID-19. Depending on the nature of its business, a no-deal Brexit could have significant implications for an organisation’s customer base, funding, inventory, and supply chain, among other considerations.
Focus on thriving
For over two months, “resilience” has been the buzzword within the business community as organisations battled for survival amid the chaos unleashed by COVID-19. Now the language is starting to change, however. The banking finance leader said that her organisation was increasingly focused on how it can thrive in the new world that is emerging.
Organisations are following different strategies with a view to thriving. Some are gathering insights on their customers and are trying to actively engage with them. Others are encouraging greater internal collaboration, recruiting staff with additional skillsets, or investing in digital channels. Organisations that have already lost, or are at risk of losing, substantial revenues due to the pandemic are actively seeking out new revenue streams.
COVID-19 continues to present ongoing challenges to UK businesses. CFOs must therefore consider a wide range of issues as they help their businesses to recover from the crisis, look after their people, and move forward with confidence.
— Andrew Harding, FCMA, CGMA, is chief executive–Management Accounting at the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.