At EFM we like to get our Associates to share their thoughts and experiences with certain sectors and activities to demonstrate to business owners how best they can support their companies through their flexible, part-time financial management expertise.
Sharing her career experiences, Associate FD Linda Harvey, will be discussing her thoughts around the manufacturing sector and the challenges that these specific businesses will be facing as we step into 2021, and how EFM can support business owners with these challenges.
As we approach the start of 2021, manufacturing businesses will be faced with even more than the usual January restart challenges. Those first few weeks are traditionally a busy time on the shop floor, recommissioning equipment which has been idle and restocking the supply chain which has been run down. For 2021, there will be extra pressure on in-house finance teams.
For those working towards filing annual accounts, auditors will be asking for additional information driven by the economic impacts of the COVID pandemic and Brexit changes. They will want more detailed long-term cash forecasts to support going concern assumptions and these may be difficult to compile given volatile trading and future uncertainty. It may be necessary to provide scenario modelling rather than simply rolling forward current trading.
Changes to levels of revenue may draw the usual stock valuation methods into question, with requests from auditors for more information and questions about shelf life, and the calculation of provisions. The realisable values of current stocks may be impacted if businesses are having to absorb customs & duty charges on post Brexit sales. Changes in activity levels may also impact the allocation of overheads in standard costs.
Away from audit preparations, your finance team have extra challenges managing cashflows and working capital if supply chains are extended due to transit and border delays. And for those businesses where finance support commercial activities customer contracts and supply agreements may need to be revised to reflect new INCO terms and freight arrangements.
2021 will also see the first payments due against some of the COVID loan funding, and this will require some additional cashflow planning. It is also possible that some businesses will be selected for furlough payment audits.
Changes in trading levels may mean that you need to consider expansion or contraction of manufacturing operations. If that is the case, the consideration and comparison of these business options will require some financial evaluation and modelling.
However refreshed your finance team are when they return from their Christmas break, the demands upon them at the start of 2021, may be considerable. Unfortunately, some of this work simply cannot be delayed as audit schedules and filing deadlines will be immoveable.
EFM is here to support your business!
Business owners can get the bespoke support they need by insourcing their finance and accounting services to EFM on a fully flexible basis – starting from as little as an hour a month. Our UK and Ireland team of experienced and multi-sector finance professionals range from high level Finance Directors & Financial Controllers, to support functions, such as Bookkeepers, Credit Controllers & Payroll Managers.
To find out more around how EFM’s tailored financial management services can benefit your company, please download our informative brochure or get in touch with the central team directly via firstname.lastname@example.org or call 01582 516300 to set up your free initial consultation.