Majority of businesses don't have a cashflow forecast
Kirsty McGregor was dismayed to learn only 27% of businesses had prepared a cashflow forecast. Has the profession done enough to support these businesses?
I’ve been privileged to be able to communicate, and attempt to support, several hundred firms of accountants over this period and have heard about their experiences, their challenges and, thankfully, their successes too.
I haven’t been in frontline practice myself for almost 17 years, but I remember only too well how much a responsibility you feel to your client as their accountant. I now feel that same commitment to the leaders in my member firms.
But over the last few weeks, I’ve had a growing feeling of unease. Something wasn’t making sense. Why were businesses not preparing cashflow forecasts in greater numbers?
Every opportunity I had, I’d check with firms whether our research from our ACCA/CFN SME Recovery Tracker rang true. It couldn’t be right, could it?
Only 27% of businesses had a written plan? Surely virtually every business should have a plan to trade their way out of lockdown, to consider how they would deal with lower revenues, lower margins, tighter working capital cycles and the repayment of various elements of deferred debt coming over the horizon. But I was being told 27% was an optimistic figure. For the businesses without a plan, winging it and hoping for the best is a highly risky strategy.
Could accountants not persuade clients? Were the businesses afraid of incurring fees? Would they rather move forward in partial denial? What was going wrong?
So I set out to investigate and I found there was a real mixture of reasons. Yes, there are a handful of firms or practitioners who have spoken to every client and many do have cashflows, but across the whole profession, they are in a real minority.
A couple of weeks ago, the unease turned into an urgent drive to resolve this. I had an idea what we needed to do, but I couldn’t deliver it on my own.
Thankfully, the team at Capitalise had seen it too and were on board with my vision very quickly, offering their platform and technical skills, their education team, marketing team and energy and ideas to drive it forward.
And so, we have created #LeaveNoBusinessBehind in just a couple of weeks, a campaign which we hope becomes a movement across the whole accountancy profession over the next few critical months.
I’ve likened it to us putting a supportive hug around accountants as we provide them with free coaching, practical resources and a renewed energy boost, as we ask them to go even further than they have already, and save many SMEs from near-disaster.
Other partners came on board to support the initiative and I am grateful to them for sharing our mission, including AccountingWEB, AVN, ACCA and many others, and I announced it for the first time on Any Answers Live two weeks ago.
We’ve also had messages of support from some of the biggest names in accounting. Steve Pipe has added his voice and sent this message: “Playing our part to #LeaveNoBusinessBehind is one of the most important things any of us will ever do. This is what all of our training and all of our experience has been for.
“We must now use every ounce of our professionalism to make thing better for businesses, employees, families, communities and the economy as a whole.”
We launched our Skills Hub on last Thursday and invite you all to join us. Together we can do this.
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Kirsty is a chartered accountant and Chairman of The Corporate Finance Network.
She has advised SME clients on corporate finance matters and transactions, including having set up several corporate finance departments for regional firms of accountants.