As we reach the end of another tax season, accountants are able to release some capacity to focus again on the other advisory needs of their clients.
It is likely that during January you may have had to prioritise those clients who were particularly hit hard and struggling. Many were resilient enough to withstand what 2020 threw at them, but when another lockdown was announced, this was one step too far for some businesses.
Triaging your client base now allows you to focus your efforts and resources on the most appropriate advice for each client’s situation.
Last spring, we found that many accountants weren’t sure which of their clients did have sufficient reserves to manage through the lockdown and part of the #LeaveNoBusinessBehind campaign, supported by many in the accounting profession including ACCA, focused on assisting accountants with practical tools so they could be confident to speak to every client and understand their requirements.
By the time this lockdown was announced, far more clients had cash flow projections and were able to understand the implications of another downturn or even growth spurt on their business. In addition, accountants also understood much more about their clients’ capital position and level of resilience.
This increased awareness allows accountants to quickly predict which of their clients would be struggling, those who are steady and able to cope, and the businesses which are still able to grow. This makes the work far more efficient as it’s possible to direct these possible and specific solutions to each group:
reviewing cash flow projections to understand the short-term and longer term implications of the lockdown and the impact on the burn rate and cash runway
discussing time to pay arrangements with HMRC
considering whether insolvency advice is needed, especially if the business is a limited company and the balance sheet is or will become insolvent
reviewing strategies for the trading and capital position to decide whether a turnaround situation can be managed.
the clients who will survive the lockdown will require sufficient working capital facilities to continue to trade, so addressing their cash flow needs is still crucial. It may be that there are other assets in the balance sheet which the business can leverage at this time. The Coronavirus Business Interruption Loan Scheme (CBILS) remains the most powerful product for directors to access if that is possible for them
considering whether there are any other ways to inject capital into the business using tools such as R&D relief, capital allowances claims, debt recovery for slow or unwilling customers and having systems so that the internal capital is tightly managed - all remain options for most businesses.
business owners who are able to continue to grow their companies should be nurtured because they are valuable people who will contribute to rejuvenating our economy. Providing them with the confidence and skills to develop their strategies is one of the most powerful things an adviser can do for a client. Brainstorming, writing business plans or just being a sounding board are all ways in which you can help that management team to succeed
funding routes to support growth strategies may still include CBILS or other debt products, but perhaps equity finance in the form of business angels, private equity/venture capital or crowdfunding could be more appropriate for some businesses
grants will continue to be announced as the economy looks to support the recovery, and those businesses which are able to demonstrate that they intend to increase employment opportunities or protect other jobs will find that they are more likely to be able to access many of these grants
if your client is ambitious and intent on growth then buying a company may be a quicker and more efficient route to achieving that objective. There will be multiple acquisition opportunities across most sectors as many other business owners find they are unable or unwilling to continue to trade. Corporate finance advisers will become very busy in 2021.
It’s worth remembering that the deadline for applications to the government-backed loan schemes such as CBILS is 31 March 2021, at the time of writing. While it is expected that there will be a new replacement scheme announced shortly, it is highly unlikely to have as attractive terms as these current schemes. If clients are eligible for CBILS, they should be encouraged to use it while it exists in order to bring some capital into their business.
Visit this page for more information and practical resources to support your clients through using a triage system.
Sometimes accountants do not recognise that they already have the professional training, skills and experience to be able to offer all these services to their clients and therefore they hold back from offering them. If you feel that your team requires more support to have the confidence to speak to businesses about this broad range of capital advisory and corporate finance routes, you may be interested in the unique online ‘Learn’ courses, many of which are available to members of the ACCA through the partnership with Capitalise:
Core – free to ACCA members to access
Adviser – free to ACCA members to access
Mastery – available for free to subscribers of Capitalise with Starter package from £78/month
Corporate Finance – available for free to subscribers of Capitalise with Starter package from £78/month.
In addition, those firms which subscribe to Capitalise on a Partner or a Pro subscription will receive the additional resource of a Partnership Manager, who will review your whole portfolio, identifying each client’s most likely requirements, and can then assist firms to understand how to progress each client case. Firms find this an invaluable support when they are developing their services so they can ensure they are able to offer the capital advisory services which their clients will require during the lifetime of their business.