While uncertainty can be hard to manage, robust contingency planning can help mitigate some of the strongest impacts. Knowing the questions to ask, or where to find information, can make all the difference. We have outlined below some of our top tips for managing this uncertainty over the coming weeks and months.
1. Cash flow
Remember cash flow is king. Look ahead and predict when there may be any issues. If you do not already prepare cash flow forecasts it may be a good time to begin doing so. When cash is restricted, the temptation is to make late payments. This should be resisted where possible with late payments already causing problems for some businesses. We would encourage you to talk to suppliers if you are struggling to meet payment terms to avoid harm to your business’ reputation. We also advise businesses to check their debtors, suggest customers pay your invoices by instalments (if such arrangements are not already in place) to accelerate cash flow and to generally tighten up your invoicing and credit control processes.
2. HMRC’s Time to Pay Service
All businesses in financial distress and with outstanding tax liabilities may be eligible to receive support. HMRC have introduced a coronavirus helpline 0800 015 9559 to help answer the growing number of businesses requiring support. Of course the Government is expected to introduce further plans to help the economy so hopefully more assistance will be forthcoming.
3. Review business costs
Look at all costs and reduce discretionary and non-essential expenses as far as possible. Fixed costs such as wages, rent, utilities, financing costs and tax liabilities not affected by a decline in sales need to be properly managed. Consider whether some costs can be spread rather than paying in one lump sum (e.g. car insurance). If you are thinking about investing in new capital equipment you may wish to consider delaying this. Conversely, if you have good cash reserves, there may be favourable deals at the moment if you do choose to invest.
4. Finance help
It is sensible for all businesses to investigate what help is available from their bank, what terms and conditions there are, and whether the help is currently needed. RBS, Lloyds Bank and Barclays have pledged to offer support by mortgage repayment holidays, temporary increases in credit card limits, waiver of fees on early access to fixed savings accounts and late credit card, mortgage, and loan payments.
5. SSP
Be clear on what your policy over the payment of SSP is for staff who contract coronavirus or who are required to self-isolate.
6. Review mortgage payments
Banks will be lending cheaply so it may be worth consider remortgaging. Mortgages are based on past data, which will invariably be better for these past three years – defer applying and that may mean lending based on reduced profit figures making it more difficult to get a mortgage. Many mortgages also permit payment holidays, especially if you have previously made overpayments.
7. Try to carry on and look ahead
It is important we all try to carry on. This will be harder for some businesses that others. The current situation will probably change the way we all work and how businesses operate. We will all learn lessons which should help in the event of future crisis
