2016 was a year that defied predictions and as 2017 unfolds, it looks as if once again change will be the only constant for local business, says the Leicester office of financial and business advisers Grant Thornton.
Amidst the uncertainty, Grant Thornton partner and practice leader in Leicester Chris Frostwick, identifies five key areas for local businesses to look out for in 2017, to help them keep ahead of the game.
Introducing IFRS 15
The final countdown has begun for businesses to apply the new International Financial Reporting Standards (IFRS) 15 Revenue from Contracts with Customers standard for reporting periods beginning on or after 1 January 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, and businesses should begin preparing now or face challenges come the transition date.
This is an important change, so we are planning an informative IFRS update event for Leicester and East Midlands businesses in April.
The Brexit vote followed by Trump’s election as US president has undoubtedly caused business confidence to falter.
As Brexit plans progress and Trump settles into the White House, the landscape should begin to stabilise as we gain a better understanding of what is happening – whether that’s positive or negative.
Whilst latest economic reports show the UK economy has so far avoided the post referendum collapse many predicted, some degree of stability is needed to help businesses – and the economy – move forward.
Whilst a weaker pound is 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 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 M&A activity as US buyers look to acquire quality UK businesses at a cheaper price, meaning local businesses looking to sell or grow through acquisition could benefit.
This April sees the introduction of the 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 have to pay only 10% of any approved apprenticeship training costs, with government footing the rest of the bill.
Implementing the new system will pose some challenges for local firms but could give them a chance to create valuable, industry-led training opportunities to help plug the county’s skills gap.
Brexit could see the nationwide skills shortage become more acute, particularly for the logistics, agriculture and food sectors, which traditionally rely on overseas workers.
Businesses need to look at how to best incentivise staff to encourage recruitment and retention. This doesn’t have to be solely through pay. Flexible working, pension arrangements, enhanced working conditions, training and career opportunities can help attract skilled employees.