Mike Lloyd, managing partner of accountancy firm Haines Watts in Swindon, shares his advice for businesses around surviving Covid-19.
In these extraordinary times, business owners are under huge pressure to make rapid decisions to support and protect their people and to ensure business survival.
For most owners, managing cash and protecting cash flow is the immediate concern. The Haines Watts team are on hand to support any business with questions at this time – 01793 533838 or email email@example.com.
Here are some practical tips to put into action now that will help you measure the current state of your business to face the challenges in the days ahead. These tips were important to businesses adjusting to the effects of the initial lockdown and are equally important now in relation to planning for and surviving the recovery period and thriving beyond it.
Understand your current position
Only by doing this can you complete accurate forecasts and make informed decisions on the level of savings you need to make in order to continue operating. Don’t overlook the basics.
Ensure supplier invoices and purchase orders are loaded onto your accounting system to give you a reliable indication of what is outstanding. Also issue all your sales invoices promptly
Talk to customers to find out their current position. Get an understanding of when they expect to pay. Most will pay within terms, keep records of what was discussed so there is clear agreement between you.
Keep analysing your bank statement so you know what to chase and have a real time picture of your cash flow.
Review your costs
Review current payments and costs forensically. There may be costs you’ve been incurring and just haven’t had time to action. Simple items like mobile phone costs or software licences. If they are not relevant, then cancel them.
If you are in the retail, leisure, hospitality or nursery sectors, make sure you receive the 100% business rates relief effective from 1 April 2020. Inquiries should be directed to the relevant local authority.
Look at other ongoing costs you may be able to do without in the medium term, which you can reinstate at a later point. Let your supplier know that it is only temporary.
Perhaps ask for a ‘break’ or a lower charge for a defined period if this makes more sense.
Manage your cash flow
If you have sufficient cash for the near future, keep a working three month forecast document. Roll it forward on a weekly basis to ensure your numbers remain accurate. If you do not have a buffer, then you can manage your cash by doing some of the following:
Reschedule creditor payments: speak to your suppliers, landlords, and your bank and try to reach an agreement on payments. Communicate with creditors sooner rather than later. Consider cancelling standing orders or direct debits so you are in control of which payments leave your bank account and when.
Defer VAT payments: the Government has deferred the next quarter of VAT payments for all businesses until the end of June 2020. Businesses will have until the end of the financial year to repay those bills.
Reschedule tax payments: if you have outstanding tax liabilities, talk to HMRC about their Time to Pay service.
Director’s loan: consider whether you are able to personally put cash into the business to support your short term needs.
Funding and Grants: the Financial support for businesses during coronavirus (COVID-19). There are a number of options potentially available to businesses and details of these can be found by following this link.
We know that business owners across the UK are doing everything they can to support and protect their people. If you have exhausted all options you can look at these options to avoid redundancies:
Temporary pay cut for your staff – work out what percentage reduction is needed then discuss and reach agreement with your staff on the amount and for how long. Speak to your staff before you reach a decision – many will do what they can to keep in work and support the business.
Access the Coronavirus Job Retention Scheme (CJRS) – if you have no other option but to lay off staff, first think about using the CJRS, where currently you get reimbursed 80% of their wage costs, up to a cap of £2,500 per month.
We are here to help you in any way we can we can.