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2017: when change will be the only constant
2016 was a year that defied predictions. As 2017 unfolds, it looks as if once again, change will be the only constant for local business.
That is the message from financial and business advisers Grant Thornton. Amid the uncertainty, Kevin Gale, practice leader at the firm’s offices in Milton Keynes and Northampton, identifies five key areas for local businesses to look out for in 2017 to help them keep ahead of the game.
The Brexit vote followed by Donald Trump’s election as US president has undoubtedly caused confidence to falter throughout the business community.
As the year unfolds, as Brexit plans progress and as Trump settles into his new position in the White House, the landscape should begin to stabilise as we gain a better understanding of what is happening - whether that is positive or negative.
Encouragingly, latest economic reports show the UK economy has so far avoided the post-referendum collapse many predicted. However, some degree of stability is certainly needed to help businesses and the economy – to move forward.
While a weaker pound is clearly good news for companies selling their products and services overseas, those importing raw materials or goods for resale in the UK have seen costs rise.
Unless importers have been savvy enough to lock in exchange rate deals, they will either have to absorb the additional cost themselves or most likely, pass it on to the consumer - which could impact sales.
More positively, the weaker pound against the dollar could see an increase in merger and acquisition activity as US buyers look to acquire quality UK businesses at a cheaper price. So local businesses looking to sell or grow through acquisition could benefit from the current landscape.
April will see the introduction of the much talked about Apprenticeship Levy, requiring all employers with a payroll of £3 million or more to pay an annual 0.5% levy on their total wage bill into individual accounts.
Businesses can spend the money accrued on approved apprenticeship training and assessment for employees, boosted by a 10% government top-up.
Smaller employers will also benefit, having to pay only 10% of any approved apprenticeship training costs, with government footing the rest of the bill.
Implementing the new system will undoubtedly pose some challenges for local firms but it could give businesses a much needed chance to create valuable, industry-led training opportunities to help plug the county’s skills gap.
The Brexit vote could see the nationwide skills shortage become more acute, particularly for those sectors which traditionally rely on overseas workers such as logistics, agriculture and food.
Local haulage companies are already citing a shortage of skilled drivers as a key issue, on top of having to contend with rising fuel costs following a sustained period of low prices.
Businesses need to look at how they can best incentivise staff to encourage recruitment and retention - and this does not have to be through pay. Flexible working, pension arrangements, enhanced working conditions and training and career opportunities can all help companies attract the skilled employees they need.
The final countdown has begun for businesses to apply the new IFRS 15 Revenue from Contracts with Customers standard for reporting periods beginning on or after January 1 2018.
IFRS 15 will replace IAS 18 Revenue and IAS 11 Construction Contracts and establish a comprehensive framework for determining when and how much revenue to recognise.
The new standard will affect almost all companies as it covers revenue from all contracts with customers, except that from leases, financial instruments and insurance contracts. Business should begin preparing now or they could face challenges come the transition date.
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