ICAEW presses ministers on cash flow

9 April 2020: in a series of meetings with senior government ministers ICAEW has stressed that the paramount issue for businesses right now is cash flow, writes Institute CEO Michael Izza.

Early on in the coronavirus crisis, Government recognised the value of what they call ‘business representative organisations’: a select group of professional institutes and sector bodies, including ICAEW.

We have two abilities which ministers now consider absolutely vital: we feed them real-time intelligence from our members and constituents, which tells them what’s actually happening in the economy, and, in turn, we transmit and amplify (and occasionally explain) the messages which they want to get out to the business frontline.

The last few days have seen a couple of good examples of this dialogue.

Yesterday my colleagues Frank Haskew and Anita Monteith, from ICAEW’s Tax Faculty, had a call with the Financial Secretary to the Treasury, Jesse Norman. The Minister made a point of thanking them for the extensive technical assistance we had given HMRC over the previous weeks on key measures such as the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme.

It is fair to say that Whitehall is working flat out at the moment and has been doing that for weeks. The readiness of ICAEW to supply additional expert bandwidth, to contribute critically but constructively to how policy is developed and implemented, is clearly much appreciated.

In that spirit, Frank and Anita put forward ideas for additional help to companies, such as accelerating the repayment of taxes owed by HMRC to businesses and self-employed taxpayers, and by bringing forward the January 2021 introduction of postponed accounting for VAT to benefit importers. But above all, they emphasised that the paramount issue for businesses right now is cash flow.

I had the opportunity to reinforce that point this afternoon, when I and the leaders of other business representative organisations had a call with Nadhim Zahawi, the Minister for Business and Industry at BEIS.

While the initiatives already announced by Government are welcome, too many companies have yet to see their impact on their balance sheet. Unless this cash starts flowing out into the real economy soon, it will arrive too late to help them.

The British Business Bank is announcing a further tranche of accredited lenders, and this cannot happen a moment too soon. It will help alleviate capacity challenges in the banks, which at the moment are undermining the potential effectiveness of schemes such as CBILS and CLBILS. Specifically, ICAEW wants to see more asset based lenders accredited in the very near future, as this kind of finance will work better for many businesses’.

I am confident that Government remains committed to do whatever is necessary to support businesses, protect employment, and sustain confidence. Much has been achieved already, and although some significant gaps remain – for example supporting start-ups – we are now largely into a phase of follow-up detail and delivery. Cash is the crisis today, and we have left ministers in no doubt of that, but many more problems will emerge not just in the days, but the weeks and months to come. Your feedback equips ICAEW to make those points to Government – please keep it flowing via our member survey.

For the latest news, insights and guidance for accountants on the COVID-19 outbreak, visit ICAEW’s dedicated Coronavirus Hub.