Riding the Coronavirus storm...
Updated: Mar 18, 2020
A few clients are concerned about the impact that Coronavirus is going to have on their business, along with local flooding it seems recently we are amid the perfect storm. Key issues that businesses are facing at this moment are:
2. Employee absence
3. Lock down
4. Long term financial impact
This post should hopefully offer some practical tips to help businesses get through the next few weeks and months.
Cashflow is by far the main concern for businesses, ways that you can free cash tied up in working capital are as follows:
Chase outstanding debts
Talk to the customers that never pay on time, put extra effort to get any overdue money in and discuss paying on time in the future. Get on top of the older invoices that remain unpaid, chase payment, and if necessary get the letter before action out (final letter before legal proceedings).
Clear obsolete stock If there are old items in stock look to offer discount and convert it into cash. This will then free up warehouse space for more profitable items.
Look to minimise your payments Suppliers If you are paying suppliers earlier than their terms, defer the payment until invoices are due. If cashflow is going to be tight, and you are unlikely to make payment talk to key suppliers about extending terms. Finance
Where you have credit cards, finance agreements and business loans talk to the banks and finance houses to see if they will extend terms or give a repayment holiday..
Outstanding Taxes HMRC have scaled up their time to pay service, so if you are concerned about paying your taxes as a result of the impact of Coronavirus as contact them 0800 0159 559, they can then look to agreeing a payment plan in instalments.
It was also announced in Wednesday’s budget the launch of a ‘Coronavirus Business Interruption Loan Scheme’ for loans between £1,000 and £1.2million. Further information can be found on the link below, but if you do need borrowing please talk to us first to help you secure the right amount for you and your business.
***This has now been extended to 5million
Small business rates grant
The budget also announced a £3,000 grant for businesses that qualify for the small business rates relief. If you are eligible, please ensure that the local authority have the correct details on your latest business rates statement.
*** This has now been extended to £10,000 and an additional £25,000 for retail leisure and hospitality businesses that have a rateable value of between £15,000 and £51,000
In Rishi Sunak’s speech on Wednesday he predicted that 1/5th of the workforce could be off temporarily. To help with employer’s costs of this SSP is now payable from day 1 and employers will get up to 14 days refunded where they have less than 250 employees.
If you do have employees that are self-isolating please ensure that they call 111 to try and gain a sick note, to be able to make this claim.
Please also note if your employees qualify for sick pay and self-certify they can not work during this period.
If we do go into lock down, it’s time to think out of the box and look at what can be done to use this time most effectively:
Business Interruption Insurance
It is worthwhile checking with your insurer to see if you have Business Interruption on your policy and what level of cover you have.
We are lucky with most of our systems in the cloud we can work remotely if needed. Review your systems and procedures, identify what is blocking your employees from working remotely, then speak to your IT provider (we can recommend one if needed). Tools to help us remote work are:-
One drive – for all our working papers and correspondence
Xero – for our accounts and client accounts
Receipt bank – for automated purchase invoice publishing
Zoom meetings – for team meetings and client calls
Remote desktop connections – for desktop software we are shortly getting rid of
As Abraham Lincoln said
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe”
Sit down and look at the critical tasks that need to be done, meet with your team and throw ideas around how these can be achieved if we go into lock down. If they can’t be done during lock down task them to review the processes behind these tasks, and how they can be improved, so that you can bounce back quickly should the business have to shut. As well as discussing the critical tasks look at all the tasks that get constantly pushed back, divide them between the team and use the time to tick them off.
Use this opportunity to work on the business and plan for the next 3-6 months:
Really think about you goals and the direction that the business is going in.
Take a deep dive into your financials
look at costs is there any unnecessary spending?
look at your pricing, when was the last time you reviewed what you charged?
Think about what the key financial drivers of the business are, how could you monitor them?
Look at your forecasts or get a set produced
Review systems and procedures, even better task staff to review systems and procedures, then produce improvement recommendations. Then prepare a weekly action plan in to make these improvements.
Use Zoom meetings to catch up with staff, when was the last time you completed an appraisal?
On a final note now more than ever is the time to think about switching from desktop accounting to the cloud. I hear of companies that keep an old PC to run Sage desktop, if the office closes there is no access to the accounts never mind the documentation that is sat in the filing cabinet next to it.
A full cloud accounting system can be accessed anywhere with all the information you need; purchase invoices no longer sit on shelves collecting dust they are stored electrically attached to each transaction.
If this is something you are considering doing, then please get in touch.
Coronavirus is going to have a short-term impact on businesses it’s inevitable, but we need to look for the opportunities to bounce back from it as quickly as possible. Hopefully these few tips will help towards doing this. If you do need any help or support with any of the tips above, please get in touch and talk to us.