Economic recovery: the concrete proposals of accountants

To help the economy recover, the College of Accountants unveils 50 concrete proposals for businesses. For good reason, on the front line with professionals, accountants are witnessing the profound impact weakening companies. Image SME’s 2020 balance sheet is a perfect illustration of the losses in sales. According to the cumulative revenue index, activity decreased by 8.4% in 2020 compared to 2019. Accompanying companies in their efforts to benefit from state aid, accountants now have a year to go back on the difficulties encountered. Emergency funds, solidarity funds, partial activity, PGE… In total, more than 50 pragmatic proposals were presented at a press conference. Which are simple to implement with the aim of accelerating the recovery of the economy.

Nearly a year later, in February 2022, the Order of Chartered Accountants and the French Banking Federation signed a place agreement with the Government allowing VSEs in difficulty to be able to obtain an averaging of their loan guaranteed by the State (PGE). This new device was requested by accountants since the submission to the Minister of the Economy of these 50 proposals. It should make it possible to properly support VSEs in this period of economic recovery.

SME 2020 review: Accountants on the front line with businesses to revive the economy

The combined turnover of companies in 2020 will have been negative compared to 2019 each quarter. However, quarters have proved to be tougher than others. Thus, the second quarter of 2020, with the first containment, led to a drastic drop in the turnover of SMALL-smes. Across all sectors, they lost more than 20% compared to the same quarter of the previous year. The peak was reached as early as April, with a %. decline of about 35%. Subsequently, benefiting from the easing of restrictions and summer holidays, the third quarter recorded only a small difference compared to 2019 (-1%).

In any event, over the year, more than 8% of cumulative revenue was lost. Not all regions and industries are equal in the face of the crisis. For example, New Aquitaine reported a 7.1% decline in EPS revenue. The same goes for Occitany. This is better than the national average; better also than the Ile-de-France and Corsica, the most affected regions with -13.1% and -14.1% respectively; but less than Brittany and its -5.6% for example.

In terms of business, hotels reported a 44.4% decline in sales compared to 2019. Traditional catering did not fare much better at -38.7%. %. on the other hand, it is a little better on the fast food side, which still loses 21% of sales. Clothing sales and hairdressing, for example, also lose 20% of sales. Finally, the sectors least hard hit are car trade %. (-6% or construction with -4.7%. %.

To remedy the situation, the College of Accountants received proposals from more than 7,000 accountants. These are intended to provide clues on the measures to be implemented for a rapid recovery of the economy. They themselves had to accelerate their digitalization to effectively support professionals during the crisis.

These proposals, real feedback from professionals in direct contact with the reality that companies have been living for almost a year, are intended to be simple to implement to produce immediate positive effects […].

Lionel CANESI, Chairman of the Higher Council of the Order of Chartered Accountants
economic stimulus companies covid
While all these proposals will not be unanimous, they at least give cause for thought.

Making it easier to access government aid for a rapid recovery of the economy

Largely exploited by companies to overcome the crisis, state aid, however, poses difficulties that alter the perceived profit. For example, accountants propose adjustments to both the form and the fund to facilitate the process, clarify aid or improve its impact. All this, to facilitate the recovery of the economy, as well as the digital transformation.

Some of these relate to the partial activity and APLD scheme. For example, they suggest facilitating the formalities associated with partial activity. Or to maintain a single support rate, up to 70%, regardless of their industry, until 31 December 2021. Similarly, they recommend that the acquisition of paid leave rights be paused in partial activity time. As well as simplifying the conditions to require employees to take time off and take RTT days during these periods.

The Solidarity Fund is also no exception to suggestions for the recovery of the economy. Initially, accountants would like to see this fund open to companies created in 2020 and 2021 that have bought a commercial fund or invested with borrowing. They also recommend extending the fund to allow it to cover some of the fixed expenses.

With regard to the EMP, the accountants are asking for a deferral of interest and debt repayment until the crisis is over, so as not to undermine efforts to revive economic activity.

economic stimulus covid expert-accounting proposals

Strengthen corporate capital to enable recovery

Strongly weakened by a year of crisis, corporate equity and cash flow are at an all-time low. To remedy this, accountants are considering several measures to stimulate the economy.

On the financing and investmentside, they suggest an exemption from profits set aside and held for 5 years or incorporated into the capital within the limit of 50,000 euros per year. They are also seeking to remove some of the brakes by increasing the tax cut for private equity subscriptions. In the same vein, the accountants propose to set up an over-amortization on innovative digital investments and eco-responsible investments.

The report also proposes accounting changes to stimulate the economy. For example, it recommends that “Covid” debt be taxed to identify viable businesses in order to quantify precisely and take appropriate measures. Moreover, it envisages being able to deduct the provision to take into account the depreciation of the trade fund in 2021.

Other proposals are more in favour of consumption, to inject money back into the real economy. For this reason, accountants are particularly concerned with unlocking the savings of the French with an advantageous tax system. For example, they suggest unlocking wage savings exceptionally without conditions of use. Or to allow the withdrawal of up to 50,000 euros from life insurance contracts, under tax-attractive conditions.

To facilitate entrepreneurship despite the situation, they recommend the creation of a unique status as an individual company. The purpose of which would be to protect the entrepreneur’s wealth, including a tax and social tax limited to the sums taken. They also propose to open an unemployment scheme for executives whose companies have been liquidated because of the Covid.

Other proposals are more about labour law. In particular, they suggest that the increase for the first 4 hours of overtime per week should be abolished during the post-Covid period. Or to relax the rules of the CDD to make the hiring process more flexible.

February 2022, the spreading of their loan guaranteed by the State (PGE)

With this new agreement signed 1 year after these proposals, accountants are expanding their “Business Story Prevention” support system. Thus, companies that do not yet benefit from the support of a chartered accountant will be able to benefit from free help on certain services.

On the one hand, they can carry out a diagnosis of prevention of difficulties to limit failures and guarantee economic recovery; on the other hand, they have the possibility of obtaining the certificate necessary, depending on their situation, for the spreading of their EMP.

Since the beginning of the crisis, accountants have been supporting companies to help them get through this crisis. They are more than ever establishing themselves as true partners in the daily lives of business leaders.

The revival of the French economy is a national cause in which accountants want to play their full part. Business leaders must be supported as best as possible in this pivotal period.

Lionel CANESI

Sources

  1. SME analysis: 2020 balance sheet, national study of the College of Accountants, SME Image and the Observatory of the Accounting Profession.
  2. First economic barometer of 2020, Order of Accountants, Press Conference of March 10, 2021
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