17 March 2020
Practical ways to manage the CORONAVIRUS crisis.
17 March 2020
It is important that you consider the potential impact the current CORONAVIRUS pandemic is having on your business.
We have set out below some practical ways you can help your business manage this difficult period: –
1. Keep in touch with your accountant
Your accountant understands your business and can be a useful source of help and guidance, especially when dealing with cash flow projections, banks, HMRC, suppliers, credit control etc.
Contact your accountant before making any significant financial decision about the business. https://www.morrisseyca.co.uk
Understand the cashflow position of your business, the current bank balances, overdraft facilities, bank loans, asset finance agreements. Carry out cash flow projections to identify potential cash flow shortfall periods. Act early.
Ensure that your year end accounts are completed early and that you know what your tax bill will be and plan for payment or deferred payment with HMRC. Do not put off or defer preparation of the year end accounts or management accounts for the business.
4. Daily Management Briefing
It is a good idea to arrange a daily briefing with your management team, to brief, update and prioritise tasks, you don’t have to physically meet you could arrange a conference call with everyone dialling in.
Check your liability to HMRC and whether there are any outstanding payments due to HMRC. HMRC offer a “Time to Pay Service.” All businesses in financial distress and with outstanding tax liabilities may be eligible to receive support. https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
If you are in a VAT repayment position, consider submitting your VAT returns early to secure an early repayment. If you are experiencing cash flow difficulties contact HMRC to agree a payment plan in relation to your VAT liability.
Contact your insurance broker or insurance provider to fully understand your cover.
7. Government Help
Make sure that you are up to speed with government guidance including the factsheet. https://www.gov.uk/government/topical-events/coronavirus-covid-19-uk-government-response
This Budget paper advises what needs to be done if Coronavirus is suspected among any members of staff and details the financial measures that are being made available including:
• Refund for businesses and employers required to access Statutory Sick Pay
• A 100% Business Rates retail discount for one year – Note this does not apply to NI at present.
• The Coronavirus Business Interruption Loan Scheme, please contact your own bank to discuss.
7. Government Grant
If your business has an existing grant letter of offer e.g. Invest NI, Intertrade Ireland, enterprise Ireland, IDA etc consider preparing and submitting a grant claim now, which will help with your cash flow.
8. Bank Help
Contact your bank to check what help is available and the terms and conditions. All the major banks are offering support through mortgage/bank loan repayment holidays, increases in credit card limits, overdraft facilities, bank loans, early access to fixed savings accounts fee waiver, etc. Interest rate have been reduced and banks may be able to offer cheaper loans.
Understand your supply chain and contact all suppliers to ensure continuity of supply. Identify potential alternative suppliers. Remember that your supplier may not be the manufacturer and could encounter supply chain issues themselves. Identify any issues you may have paying suppliers and let them know, try to agree a payment plan, if required. Don’t simply stop paying suppliers or they may stop supplying you.
Ensure your sales invoicing processes are up to date and all invoices are raised at point of delivery or very shortly afterwards. Ensure correct credit terms are in place.
Review your debtors and ensure you have a robust credit control policy in place. Identify customers that are likely to get into difficulty and suggest they pay your bill by instalments.
Request customers to accelerate payments to you by reducing credit terms in the short term to assist cash flow, especially if you supply the retailers.
11. Business overheads
Review all your fixed costs such as wages, rent, utilities etc which are not affected by a reduction in sales need to be managed. Investigating whether these fixed costs can be spread rather than paying in one lump sum e.g. Insurance.
Consider reducing or deferring non-essential costs like marketing, advertising. Consider deferral of potential recruitment.
12. Carry On
It is vital that the business must carrying on, this may not be possible for some like restaurants, but it is feasible for many businesses. Sit down and formulate a plan to ensure the business can carry on, home working, IT system changes, the practical ways set out above.
13. The Future
The coronavirus crisis will change the way businesses and society works. When the urgent part of the crisis is over, businesses should consider what this crisis changes for them, what they have learned and plan for any future crisis. It’s important to look ahead. This crisis will end. If you require any assistance give us a call anytime.