Part 2 – Getting on Top of Your Finances
Your businesses finances are the bedrock of its stability and success. Your employee’s needs are important, but a viable business is crucial to everyone’s ongoing job security. In part 1, we discussed the steps you must make to bring furloughed staff back. This included evaluating the key roles in your business now, considering training and possibly even redundancies. Whatever conclusions you came to, these decisions will also affect your bottom line and how you run your business. Your business may have shrunk, leaving you top heavy. In some cases, businesses have grown due to our changed behaviour and you might feel confident that this will continue. In tandem to your human resources planning, you must now assess your financial situation and the choices you need to make, not just to survive, but to prosper.
Seek Business Support You Can Depend On
Seek advice from your accountant or advisor to guide you to the best way forward. Whether you’re planning a change of direction or want to try to hold on to your staff as long as possible in the hopes business will improve, your accountant’s advice on how to make your funds stretch, how to improve your cashflow and strategic tax planning will be invaluable. Or perhaps there is more work out there, but you need to invest in your marketing process to boost sales or raise your profile?
Expect the Best, Prepare for the Worst
Just this week we have seen new restrictions announced to try to stop the rise of new coronavirus infections. While this is not a new lockdown, it is clear that we cannot depend on certainties for the foreseeable future. Whether your business shrank or grew during lockdown, you want to make sure it is successful going forward now. So, what do you need to do to ensure that happens? Are you prepared for all scenarios?
Now is the time to review your business plan and cashflow forecasts. If you’re not sure what we mean, then now is the time to put them in place!
A cashflow forecast will help you to plot the ups and downs in your finances and predict them going forward. This will make it easier for you to plan for the quiet times and optimise when the sun is shining.
Your business plan is your roadmap to the business you want. Even in down times, it’s important to know what your goals are, then you can see more clearly the steps you need to take to achieve them, adjust them when the facts change and finally, measure our progress.
Consider the other support you might be eligible for, such as Job Retention Bonus, the Apprenticeship Bonus, grants professional services and advice etc. to make ends meet until business picks up. Your accountant should be able to talk you through these options.
The Chancellor’s Winter Plan announced on the 24th, included some new supports:
- Wages Support Subsidy
- This will protect “viable” jobs in the six months after the furlough scheme ends in October.
- Employees must work at least 1/3 of their usual hours and be paid for them by their employers. The government will also pay 1/3 of their usual wages. So, employees will receive roughly 77% of their wages.
- This scheme is available in tandem with the Job Retention Bonus announced earlier this year.
- For freelancers, SEISS will be extended in line with the Wage Subsidy Scheme.
- Pay As You Grow
- Firms that have taken out Bounce Back Loans or Coronavirus Business Interruption Loan scheme will be able to extend the life of their loans form 6 years to 10 years.
- This should roughly halve their monthly payments.
- Businesses can also opt for interest only payments if they need to.
- Businesses in extreme hardship may also be able to take a break in payments for 6 months.
- Hospitality and Tourism will have their VAT rate retained at the reduced 5% rate until March 31st 2021.
- Businesses that have deferred their VAT bill payments can now spread their VAT bill over eleven smaller payments
If your business has pivoted to a more virtual service or you have a lot of staff working from home, it could be that you need to invest in technology and IT. Make sure you have allowed for this in your cashflow forecast, or consider applying for one of the grants that are available for this right now.
While we are on the subject of IT, if you haven’t moved your accounts over to cloud accounting, now is the time to do it. We can support you with finding and using the apps best suited for your needs (we swear by Xero for starters). You will soon be glad you made the switch when you see how much time you save on quoting, invoicing, change orders and expenses. Other apps like Chaser will help you to get paid faster. While iwocaPay can help you pay for the supplies you need – when you need them.
You’ll soon see the difference in your bank account and in how much time you will free up to build your business or relax with your family (or down the pub, if that’s allowed!)
- Contact your accountant or business advisor to review your
- Business plan
- Contingency plan
- Available grants and tax reliefs you are eligible for
- Prepare for scenarios that may occur.
- If there is another lockdown in your area or across your sector, how will you deal with it?
- If your product or service takes a hit when restrictions are tightened, what can you pivot your skills and resources to?
- Review the lessons you learnt from earlier this year on what you need to do and how quickly.
- Remember, it’s ok to feel optimistic!
- Embrace the cloud. Seek advice on how to streamline your business through
- Cloud accounting
- Apps and IT and streamline your systems and improve productivity
- Improve your visibility. Use social media and your website to make your business visible.
These actions should get you started on preparing your finances for the end of furloughing. However, please feel free to contact us at any time if you need to discuss your unique situation.