The effects of the coronavirus, social distancing and the eventual lockdown have had a dramatic and sudden impact on many businesses who have seen their revenue streams dry up overnight.
During this period of uncertainty, it is vital that businesses quickly review their cashflows to ascertain how much cash they have got, and how long those funds will last.
Whilst Boris Johnson had suggested that it would take 12 weeks to ‘turn the tide’ against the pandemic, it is clear that we are dealing with an unprecedented situation and it is impossible to predict the timescale of the crisis.
With that in mind, it is inevitable that businesses will have to do all they can to retain cash to both survive and emerge from the crisis in due course.
This can be achieved through a combination of the following measures:
- Undertaking efficient credit control practices, by ensuring that invoices are issued for work as soon as it is completed and chasing customers for settlement at the earliest opportunity
- Taking advantage of the Government’s measures to support businesses though the crisis including the deferral of VAT due before the end of June 2020 to be paid by the end of the 2020-21 tax year; cash grants and the suspension of business rates for all businesses in the retail, hospitality and leisure sector; business rates discounts for pubs; cash grants for small businesses and refunds of SSP costs related to coronavirus
- Speaking to your Bank about finance options. The Government has made billions of pounds available to domestic banks across the UK to help businesses in difficulty via the Coronavirus Business Interruption Loan Scheme
- Speaking to HMRC about ‘Time to Pay’ Arrangements via a dedicated helpline for those who need a deferral period on their tax liabilities
- Speaking to landlords and other creditors to negotiate payment terms and the possible deferment of liabilities
- Considering reducing staff costs. Whilst unpalatable, this may be a necessary step in the short term in order to preserve future employment. The Chancellor has announced the proposed introduction of The Coronavirus Job Retention Scheme for ‘furloughed workers’ who would otherwise have been made redundant during this crisis. Until the new scheme is in place, lay-offs and short time working may be put in place to address temporary work shortages or business closures, without having to resort to redundancy
- Checking terms and conditions of Business Interruption Insurance policies and contacting the provider to discuss any potential claims
Whilst some of the Government’s measures are given by way of grants, it should be remembered that deferments and loans will of course need to be repaid eventually, and the medium-term viability of the business should therefore be considered.
We are well placed to provide the advice and assistance that will be required for businesses to consider the issues that need to be addressed and find the required solutions.