The full economic impact of the Covid-19 pandemic is not yet known and may not be known for some time.
In the meantime, businesses in Northern Ireland are making unprecedented efforts to stay afloat and retain as many of their employees as possible. Brexit negotiations are also continuing, overshadowed for many at present by the public health emergency.
These challenges create a perfect storm for the business community as we move towards the final quarter of the year.
Some businesses will be required to reimagine how they function and how they provide goods or services to their customers; others will have to divert into entirely new business areas.
Chartered Accountants Ireland, Ireland's largest professional body for accountants, in its recent policy document The Next Financial Year has published key recommendations for government to help SMEs to survive this time of crisis, and to rebuild into the future.
The government, regulators and tax authorities have provided support, through various initiatives and this is to be commended.
However, there are areas which need improvement. Public policy must be focused on providing maximum support and, most importantly, flexibility to businesses.
The priority must be supporting the businesses that are viable into the future and ensuring that they do not fail due to lack of funding or because of unworkable supports.
The Bounce Back Loan Scheme for instance has not required any test of future viability and there has been significant uptake (Danske Bank reported £50m in the first week), with approval subject to a simple application and the level of funding capped at £50,000, subject only to a cap of 25% of turnover.
There are some concerns that many businesses will avail of this loan scheme but ultimately be unable to repay for a variety of reasons, and as yet there has been no clear guidance on how government guarantees and debt recovery will work in practice.
Such guidance would be helpful for businesses to fully understand their position in the event that repayment is not possible.
Similarly, the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Scheme (CLBILS) are and will be a vital element of support for businesses, particularly as other schemes (such as job retention and tax deferrals) are withdrawn. These loan schemes support the banks with 80% government guarantees and therefore benefit businesses, increasing the probability of successful loan applications in these challenging times.
The availability of these schemes however has been confirmed only for an initial six-month period from their launch on March 23 this year.
Chartered Accountants Ireland has called for these to be extended for at least a further six months, and ideally longer, as without them the banks will have to take on the full risk and are therefore likely to be challenged in lending to businesses in financial distress through a combination of the economic impact of Covid-19 and the planned withdrawal of other supports.
Withdrawing all supports without the option of debt through a government-guaranteed loan scheme to soften cash-flow impacts would present significant challenges for both banks and businesses.
Chartered Accountants Ireland has also called for increased support for the education and adoption of digital competencies across the business community through increased grant-funded programmes.
Businesses that have digital capabilities and presence have fared significantly better since March than those that do not. The Covid-19 lockdown has highlighted the power of online retail and remote working, which have created a demand from customers and staff that will continue post-pandemic. Embracing digitalisation will strengthen the resilience of businesses into the future and will be expected by their customers and employees.
Many SMEs, however, are unsure about how to approach this challenge, so government supports should be put in place to support digitalisation within businesses.
DigitaliseSME was an EU-funded programme supporting the digital transformation of SMEs, connecting companies to digital experts, referred to as 'Digital Enablers'. It held its closing conference in February 2020.
Chartered Accountants Ireland has called on the Government to consider establishing similar supports to those that were available under this programme, which should also include toolkits and methodologies to enable businesses to digitalise.
Furthermore, it is essential that business leaders have the skillset and are empowered to drive digital transformation. These support programmes could be run by Invest NI.
The pandemic has exposed a vulnerability in the ability of SMEs to survive, but many have risen to the challenge with the help of various government supports and initiatives. This must continue into the months ahead.
A full programme of suggested business improvements, taxation suggestions and SME proposals to help Northern Ireland businesses adapt to the challenges of the Covid-19 crisis are available in Chartered Accountants Ireland's 'Next Financial Year' document, available at www.charteredaccountants.ie
Maeve Hunt is Chair of Chartered Accountants Ulster Society