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Lockdown uncertainty number one pain point for businesses say accountants

- August 18, 2021 3 MIN READ
accountants can provide key insights into the economy

A longitudinal study tracking business sentiment by CPA Australia shows rising concerns among the nation’s accountants for small business owners, with nearly half of those surveyed saying they are extremely worried about the state of the economy

The study, (a first of its kind) tracks the economic and business sentiment of accountants against the implementation of Australia’s National COVID-19 Response Plan recently agreed to by National Cabinet.

“Accountants are in the trenches with Australian businesses every day during COVID-19,” according to CPA Australia Chief Executive Andrew Hunter. “Surveying them as we transition through the National COVID-19 Plan will allow us to track its impact on businesses and the economy.

Accountants provide key insight into state of economy

Hunter says the survey will serve as a canary in the coalmine.

“We expect to see a positive uptick in sentiment as we transition through the National COVID-19 Plan. If that doesn’t happen, it may be an early warning sign that businesses and the economy need extra assistance; information that we can feed back to government.”

According to the findings to date, around 50 per cent of surveyed accountants are “fairly” or “extremely” worried about the state of the economy over the next three months. This figure drops by less than one percentage point when looking at the state of the economy over the next six months. Only 20 per cent of respondents are “fairly” or “extremely” confident about the economy over the same periods.

“Accountants in locked-down areas are generally more worried about the economy than those in non-lockdown areas, but not by a big margin. It’s clear that lockdowns create a lot of referred pain for businesses no matter where they’re located. This highlights the challenges associated with implementing different business support programs on a state by state or territory basis,” Hunter said.

Confidence in the state of Australian businesses’ performance was higher, with around 60 per cent of those surveyed “fairly” or “extremely confident” in this over the next three and six months.

Accountants concerned for businesses in financial stress

Surveyed accountants working in accounting practices reported that many of their business clients are experiencing high to very high levels of financial stress. Nearly 54 per cent expect their business clients to find it “difficult” or “very difficult” to pay debts over the next three months.

Meanwhile, over 46 per cent of surveyed accountants say enquiries they have received regarding financial distress have increased in the past month. Even in non-lockdown areas, nearly 38 per cent of surveyed accountants report an increase in these inquiries.

According to the survey, the leading cause of pain for businesses is uncertainty around lockdowns, followed by attracting and retaining the right staff and the speed of the vaccine roll out.

Support called for at times of lockdown announcments

Hunter says to abate these concerns governments could reduce the pain of lockdowns by announcing business supports at the same as a lockdown is announced.

“We’ve grown increasingly frustrated with failures by governments to plan for lockdowns and with red tape holding up the delivery of vital financial support to businesses,” Hunter said.

Nearly three-quarters of surveyed accountants are “unclear” or “unaware” of the National COVID-19 Plan. This figure was lower in lockdown areas versus non-lockdown areas (66 percent to 78 per cent).

“When it comes to the National COVID-19 Plan, it’s apparent that the government has a communications problem.

Accountants say education around National COVID-19 plan needed

“To effectively advise clients on business strategy, accountants need to understand how governments will respond to future outbreaks when vaccination rates reach 70 and 80 per cent. Forewarned is forearmed; if the business community and their advisers are better informed, they can prepare for the public and social health measures they’re likely to face.”

Close to 80 per cent of surveyed accountants think governments should be doing more to increase vaccinations. This figure is similar across both lockdown and non-lockdown areas.

“Many organisations, like CPA Australia, are pleased to support the vaccine roll-out in any way we can. We’d welcome governments exploring opportunities and engaging with business on how they can contribute.”

CPA Recommendations

Based on the results of this survey, CPA Australia recommends:

1. Business supports should be delivered nationally, not at a state or territory level.
2. Involve the accounting profession early in the design and implementation of business support programs.
3. Conduct a business education program on the National COVID-19 Plan.
4. Explore ways the private sector can assist with the vaccine roll out.

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