Who’d have thought that 2020 would be the year of the lock-down!
The Corona virus has forced governments to take drastic action, debilitating economies across the world.
My mind wonders to what a post Covid-19 world looks like and some of the financial implications.
I don’t have the answers, but I certainly have a lot of questions and this has left me noting them below. Do you have similar thoughts?
WORKING FROM HOME
With a large percentage of the workforce working from home (WFH), companies have had to act fast in arranging the infrastructure to make this possible. Whilst many companies have enabled WFH for years, the sheer scale of it now raises the question of whether there is a need for a physical office space. Several questions spring to mind:
Can this present a substantial cost saving for businesses?
Could there be a future where physical office space is reserved for hosting meetings and other events as opposed to where employees base themselves?
What might this mean for property prices if demand for large scale office space decreases?
Inevitably if this is the case, financial statements will see a significant reduction in the recognition of leases for office property. Furthermore, for those holding investment properties under the fair value model, there may be substantial fluctuations in the value recorded for these assets, bringing volatility to the Statement of Profit or Loss. For owner occupied property there may be a need to consider an impairment review.
RECRUITING TALENT AND WORKING HABITS
If WFH becomes a permanent staple in the world of work, other outcomes may include being able to recruit talent from anywhere (not confined to geographical location or employees having to relocate). This widens the pool of talent for employers and offers employees more choice when applying.
What will this mean for pay? London weighting is usually applied for many jobs based in London, however if physical location is removed from the equation will this mean a removal of the ‘London weighting’? Furthermore, the working week and hours may change. Businesses are being forced to offer flexibility to employees as schools are shut and around the clock childcare is now the responsibility of parents. This has resulted in parents having to adjust their workday to cater to the needs of their children.
Does this mean post Covid-19, the workday may no longer be restricted to a traditional 9am-5pm?
Financial implications of this may mean improved productivity if staff are working flexibly and cost savings, if pay scales are adjusted to remove a ‘London weighting’.
The lockdown has forced non-essential shops to close for business, limiting the high-street to supermarkets and pharmacies.
Does this spell a change for consumerism?
Are we thinking more about what we really need versus what is materialistic? Will physical retail shops be completely redundant and online shopping dominate our purchasing preference?
There’s no denying that E-commerce has seen significant growth in the last decade, indeed the lock-down has proven favourable for the likes of tech giants like Amazon who are racing ahead of the game when it comes to E-commerce.
However, what I think would be interesting to observe is, what consumers are spending their money on? Are we going to be more conscious of where we spend our money?
Changing buying habits will undoubtedly result in some businesses facing going concern issues. Businesses will need to carefully consider uncertainties regarding going concern on their disclosures and the basis of their account’s preparation.
Beyond financial implications, I think Covid-19 has proven that no one is immune from this pandemic, be it economically, mentally or physically!
I think the key to surviving this pandemic is resilience and a need to work together as a community to battle the common enemy #inittogether