Home COVID-19 Time to start preparing for the “unlock”

Time to start preparing for the “unlock”

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Panelists at the SA Institute of Business Accountants (Saiba) Practice Management Conference say it’s time to lift the lockdown and prepare for recovery from the Covid-19 crisis.

Highlights:

  • Now more than ever accountants are going to have to help clients navigate through the bureaucratic maze for relief funding
  • More than that, they will have to assist clients to adapt to a radically changed economic environment post-Covid-19
  • Businesses need to start re-opening to avoid permanent damage to the economy
  • The government must focus on balancing the need to stop the spread of the virus with the need to reboot the economy
  • There are massive opportunities here for accountants, but they too will need to change. They need to help clients re-position themselves for a post Covid-19 world
  • Restaurants may in future offer private cubicles and more take-aways, while local tourism could become a wave of the future.

President Cyril Ramaphosa should soften the Covid-19 lockdown at the end of April, if not sooner – that was the view of panelists at the SA Institute of Business Accountants (Saiba) virtual Practice Management Conference held this week.

A prolonged lockdown is likely to crash the economy, which may be more damaging to the health of South Africans than the virus itself. But the ramifications of a crashed economy would take many years to rescue.

The panel, chaired by Saiba CEO Nicolaas van Wyk, included:

  • Coenie Middel, founder of Middel & Partners
  • Daniel Goldberg, founder and CEO of fintech, Bridgement
  • Hanno Bekker, founder of Bekker Attorneys
  • Justine Hoppe, senior legal counsel at accounting firm Mazars
  • Trent McLaren, head of accounting and partnership at Practice Ignition

Asked whether President Cyril Ramaphosa should lift the Covid-19 lockdown, the panelists answered with a resounding ”yes”.

Here are some of the key responses from the panel.

If you were President Ramaphosa, what would you do? Should he lift the lockdown?

Coenie Middel: It makes sense to lift the lockdown. Transmission of the virus occurs when people are in close proximity to each other, and there are measures that could be taken to reduce risk of transmission. For example, companies can introduce shifts to ensure less people at the office at the same time. Public transport is an area that would need careful consideration, given the potential for transmission of the virus from this sector. Shopping centres could stagger the number of people entering to prevent too prevent cross-contamination.

Dan Goldberg: I think the President must combine economic and health policies, yet the focus till now has been on health. A complete economic shutdown could result in even more deaths than we might expect from the virus. The longer the shutdown, the more essential items become, for example stationery. In a few weeks or months when stationery producers have disappeared, we won’t be able to get stationery. Supply chains are inter-connected and one business that fails has a knock-on on other businesses in different sectors. So the definition of what is essential must be relaxed.

SA has a particularly strict lockdown, not even allowing restaurants to deliver food. They won’t survive much longer. I’ve heard countless stories of restaurants that may now have shut down permanently.

Testing coverage is another area that needs improvement. We should be doing 17-36k tests a day and we are nowhere near that.

Hanno Bekker: We need to consider the informal economy, and people who are living hand to mouth. They don’t contribute to the tax base, so there is an opportunity here to integrate them into the formal economy. If we don’t encourage and promote entrepreneurship, then our growth will disappear. This is an area that has been neglected in the government’s response to to this virus.

Justine Hoppe: SMEs provide huge employment in SA, but have been under pressure for some time, even before the outbreak of the virus. The speed with which the crisis hit, together with harsh shutdown, means there’s been a sudden shutting off of revenue. I would like to think the plan was to ensure the virus did not spread from a health point of view, but would hope that we can get business back to some kind of normal as soon as possible. Some won’t survive, and those that do will have a hard few months ahead of them. So I would like to see a “soft” or relaxed lockdown introduced as soon as possible.

Trent McLaren: In Australia many restaurants are still allowed to do takeaway, so they have had to adjust their business models to accommodate this. There are other things we can do in terms of food wastage. Accountants are best positioned to advise their clients as never before. If you haven’t had cash flow discussions before, now is the time. The risk for accountants is that they start to lose clients, even long-standing clients. How do we get clients to pay if they have no income? There’s no right or wrong answer to this. That will have to be decided on a case by case basis. Tourism is certainly going to suffer after this crisis, so we have to think creatively to see how can we pivot the services in this sector to support the rest of the economy.

How do accountants position themselves in the changed environment going forward?

Nicolaas van Wyk: What should accountants now look for? Video shops were a big thing at one point, but that’s now replaced by streaming services. Many restaurants are cash based and may not survive, and that supports hundreds of thousands of people who may not have a job when the crisis is over. The government is allocating most of the financial relief to health, not to the economy. How can accountants position themselves for this changed environment?

Trent McLaren: For years accountants have been told they must become trusted advisors to clients, and this obviously has more relevance now. We have 3,500 clients globally, many of them in SA, and our sense is they are busier than ever. If you have a niche, your job is to demystify what’s going on in terms of stimulus packages, which aren’t always that easy to understand for business owners.

Justine Hoppe: Accountants are not always as close to clients as they could be – now is the time to fix that and guide them through these tough times. Many industries will come out of this with opportunities: e-learning being an obvious one. Accountants should partner with their clients to help them overcome these challenges. When applying for funding from the banks or from government, there is so much information to process you can end up with analysis paralysis. This is where accountants are needed to sift through the complexities.

Hanno Bekker: I have some clients in commodities such as coal. When the lockdown happened, some pivoted into new directions such as surgical masks. The lockdown is going to force all businesses to reconsider their processes, and to decide whether their offices are actually needed. All businesses are now looking at how they can go digital – including lawyers and accountants. People say lawyers don’t communicate well – they speak in legalese. The is also true of accountants. In business, rather give your clients the figures they need on a single page. Improve the way you communicate with your clients.

Dan Goldberg: Clients that are in businesses that are severely impacted, help them manage their cash flows through this crisis. There’s on overload of information and it’s a very dynamic situation. Clients need help with applying for relief, with documents and navigating through the bureaucracy. Become a specialist in certain industries and understand the nuances and pain points.

Coenie Middel: Businesses will have to innovate. Most often innovation is something that is forced on companies as a matter of urgency. This means doing new things that add value. Innovation is a trend – we are very busy right now showing our clients how to innovate, analysing trends, identifying the future, adapting processes. Another likely trend in the IT industry: developing apps in the health care sector that monitor infection risks and personal health.

Don’t see the USD-Rand exchange rate as a weakness, see it as a strength. Start looking at revenue streams priced in USD and other currencies. Naspers is putting $8 billion into online education. We are negotiating with universities and schools for online education.

Local tourism could protect themselves by offering special rates. We need to prepare ourselves for more local tourism. Restaurants: will they introduce private cubicles, more take-aways? There will definitely be opportunities arising from this crisis.