How well prepared were accounting firms as the coronavirus lockdown brought large sections of the economy to a standstill? What steps did they take to keep their staff safe, and how did they support clients? What changes will they make as a direct consequence of their coronavirus experience?
We put these questions to accounting firms across Australia while in lockdown in May to ensure the CommBank FY20 Accounting Market Pulse could provide a timely examination of firms’ perspectives before, during and after coronavirus.
The starting point
From an initial survey of firms conducted in January, we knew that perceptions of business conditions had already softened from a year ago even before coronavirus hit. And we knew they were in reasonable financial shape, tipping a 3.6% increase in profits from FY19. In May we revisited their perception of business conditions and asked how prepared they had been for the unprecedented turn of events.
Unsurprisingly confidence in current business conditions plummeted. The net measure fell from 33% in January 2020 to -18% in May, the first negative net reading in the survey’s five-year history.
We canvassed firms’ assessments of their preparedness for significant business disruption across a range of areas including business continuity planning, back-up sources of working capital, and whether or not they had the technology to enable staff to work remotely and deliver services digitally. Read the results here. One insight we’ll share here is that the firms with a positive view on current business conditions were those best prepared for the disruption.
Firms embodied customer-centricity during the lockdown. Almost 80% stepped up proactive client communications, with a majority of firms also publishing greater volumes of thought leadership material to help their clients navigate market complexities. A similar proportion introduced favourable terms of business, like flexible billing.
Internally, efforts focused on lowering overheads and reducing staff costs. Common steps were restricting equity partner draws, deferring or cancelling bonuses and pay increases, and asking staff to take up annual leave. They did so to preserve jobs and retain the talent that would position them well for the future.
V, U, W or L recovery?
We asked firms what they expected business conditions to be like in one year and in two years’ time. You can see the results here. Views on the timing of the rebound differ markedly between the firms that entered the lockdown well prepared and with a positive view on current conditions and those that didn’t.