Take stock, make a plan and take action

By Anita Jaynes on 25 March, 2020

Mike Lloyd, Managing Partner of accountancy firm Haines Watts 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.

Here are some practical tips that you can put into action now that will help you measure the current state of your business as you face the challenges in the days ahead.

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 Wednesday 1st 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. 
  • Bank funding: access the Coronavirus Business Interruption Loan Scheme (CBILS) which is available to all businesses with a turnover of up to £45M. This can be accessed via 40+ accredited lenders and is available now. 

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 you get reimbursed 80% of their wage costs, up to a cap of £2,500 per month. We don’t yet know how quickly the cash will be reimbursed to employers.

This is undoubtedly a stressful time for business owners, employers and employees. I encourage you to continue to talk with family and friends, talk to your employees and talk to us too – we are here to help you as much as we can. There are also numerous resources accessible online, including the charity MIND that are dedicated to support mental health and wellbeing.

Please get in touch for any further advice or support: Call the Haines Watts Swindon team on 01793 533838 or email: swindon@hwca.com