How will we account for Covid?

This week in our training sessions people have been asking us our opinion on financial reporting in a post-covid era. At a very early stage in the pandemic, we saw companies reporting EBITDAC (Earnings before interest, tax, depreciation, amortisation and COVID), adding back profits they would have made in a ‘normal’ year – here’s an interesting article on EBITDAC from the (

Some businesses have grown during the crisis; before the pandemic, who could have predicted the accelerated rise of Zoom?  It’s now not just a brand, but also a verb known throughout the world.

However, we know that many businesses will miss their targets.  Others have been forced to change their business model (here at Adeva we had to change our business to 100% virtual – but more to come on that later) or their sector evaporated overnight, such as the events and entertainment industry.

Perhaps the most worrying trend is the increase in borrowing, burdening some businesses with levels of debt that will prove to be unsustainable and resulting in increasing risk of default. Many will not be bad business models, but increased debt makes them less attractive to investors.

Bankers find themselves in a dilemma; to some degree we are agents of the Government, we have to move at pace and get liquidity into the market. However, the press will always argue that loans were and perhaps continue to be made available too easily allowing companies to quickly get in over their heads. We have seen businesses taking advantage of Governments’  “bounce back” scheme around the globe, taking on debts without the normal due diligence or advice due to automated processes.

In future years, will businesses which survived the pandemic be more attractive investment propositions than post-Covid start-ups? Will surviving 2020 be taken as proof of adaptability and longevity?

It is most certainly going to be an interesting year or two ahead, with new challenges for the banking sector.

We’d love to know your thoughts.