Despite a positive outlook for UK SMEs, financial directors will soon encounter new challenges including skills shortage, tax headaches, and Brexit uncertainty – all of which will require tremendous amounts of scenario planning.
“Financial directors have been going through a series of phases: panic, stabilise, reset, and thrive,” says Andrew Harding, chief executive of management accounting at the Association of International Professional Certified Accountants (AICPA&CIMA).
The uncertainty caused by the pandemic and continual change in government restrictions means that financial directors will need to focus on different scenarios whilst keeping an eye on day-to-day budgets and cash needs, says Harding.
Despite 71 percent of SMEs saying they will continue trading after Christmas 2020, 68 percent have had to rethink their business models due to the pandemic, according to research led by the Chartered Institute of Management Accountants (CIMA).
The study, carried out between September and October this year to a sample of 500 full-time decision-makers working for SMEs, also revealed that revenues decreased by 6.5 percent on average in the last six months.
For this reason, Harding says government support should be continued to support businesses navigate the upcoming challenges of Brexit and regulations.
“Brexit is part of the uncertainty. Another part of the uncertainty is where we are going in regards to tax. What taxation policy is it going to be and how is the government going to deal with the deficit,” he says. “We have fiscal uncertainty, skills shortage, and Brexit coming all at once.”
SMEs say the government’s self-employed income support scheme has been the most helpful during these turbulent times, says Harding.
Grants that will offer support for employers to reskill their talent will be amongst the most popular policy, according to Harding.
Despite the pandemic, one in four businesses plan to hire new staff and 40 percent predict they will retain their workforce – highlighting the appetite for SMEs to upskill their workforce and maintain their talent amid the crisis.
Clarity will also be needed around tax plans for the next two years, as well as the completion of trade deals to provide further clarity around the country’s long-term economic strategy, says Harding.