Tips for Coronavirus

COVID-19; Finance & Strategy; Leadership & Culture

Allan Wilson

09.04.2020

Our tips for keeping your head through the Coronavirus crisis

It’s now almost 3 weeks since Boris Johnson began his daily press briefings and Rishi Sunak unveiled the first raft of unprecedented emergency support. With every corner of the business world being affected by the Coronavirus crisis, we want to make sure you’re doing everything you can to keep your business in good shape.

A lot of the rhetoric has been ‘we’re in it together’ and at Wilson Partners, we couldn’t agree more. This problem is global and it will have a lasting impact on us all – the best way through this is to work with your people, your clients, your advisers and your supply chain. Keep talking to each other, keep payments going and come up with solutions that suit everybody. The more we collaborate, the more we’ll keep the business world turning, the easier the recovery.

Here’s our update on your actions and some additional tips to help keep you in shape for recovery.

Keep a dialogue going with your clients

Hopefully you’ve spoken to your customers to understand how they are affected. This will have given you a good guide to help forecast the financial impact of the crisis on your business.  What is your debtor position, who is likely to delay payment, can they justify this?  A simple “we’re just not paying you” from customers is not a constructive or helpful position – understand why and deal with it.

Tip: By maintaining the dialogue with your clients you can not only have frank discussions about cash but also explore what opportunities there are to help each other. This is not about a quick win – it’s about strengthening long term relationships that will last well beyond the current difficult times.

Keep reviewing your business plan

You should have reviewed your short term business plan. This is vital to get you thinking about what you need to do now to protect your long term future. You should have completed your cash flow forecasts, and planned for different scenarios.

Tip: Keep reviewing your plan. Things are changing almost daily so it’s important that you keep on top of it so you can react accordingly and be in a position to make informed decisions, not knee-jerk reactions.

Keep on top of cash flow

You’ve hopefully been able to steady your ship or at least have worked out how to in light of the financial support available. We’ve spoken to lots of businesses that are hugely impacted by the disruption but by being able to see how the financials play out can take comfort that they will be able to see it through.

Tip: We recommend that you forecast 13 weeks ahead and that you really get to grips with your numbers and understand the key drivers – seek advice if you need to.
Good companies should not fail due the crisis. Of course there will inevitably be some casualties, but there is huge support from the government which in the very least should buy you time to navigate the short term whilst you plan for the longer term.

Note – We talk about cash being king (or queen) and it can be tempting to hold on to cash for longer but this will in turn put the squeeze on your supply chain and could be the difference between their success and failure and consequently your own. Keep the dialogue going with your clients and supply chain, keep money moving – remember we really are all in this together, so weigh the balance of holding on to cash with the benefits of maintaining a healthy supply chain.

Help with tax payments

You should by now have cancelled your VAT Direct Debit payment for the period between 20 March 2020 until 30 June 2020, unless there is a strong desire to make the payment. Even if you feel you want to make the payment there’s a strong argument to keep the cash. If in this position you could perhaps put it in a separate deposit account. It means you have control over it and have set it aside to make payment when it’s due.

Tip: Remember! This payment becomes due on 31st March 2021, so be sure to have a plan in place to meet your commitment. You can still request additional time to pay your PAYE, NI and Corporation Tax bill with HMRC and you’ll be pleased to know that they’ve introduced an online webchat  service to agree deferrals, as well as the phone lines.

Job Retetion Scheme – Understand the rules

Hopefully you’ve ascertained whether furloughing staff can work for your business, and will continue to do so over the coming weeks and months as things change. If you have seen a sharp drop in turnover then it could make all the difference to your short term survival and your ability to accelerate out of the lockdown when the time comes.

IMPORTANT NOTE!

We strongly recommend seeking legal / HR advice on the furloughing process. It could be tempting to push it through without the correct process followed, not to have the correct documentation in place or to try and take ‘advantage’ of the job retention scheme.  There are strict rules in place and we fully expect HMRC to be on the look out for any abuse of the rules.  There will be huge scrutiny around this support in the years to come – do not put yourself in a position where it comes back to bite you in due course.

Other considerations:

Is it a good time to get your year end accounts prepared?

If you’ve just had your year end, you might not want to delay getting your year end accounts done. If you’ve made losses in your last financial year, you could be able to carry the losses back to get a rebate from HMRC.  Do however consider the impact on credit ratings of losses being shown in your published accounts – you might therefore hold off from submitting to Companies House.  Conversely, if you had a profitable year, then getting your accounts submitted promptly could have a positive impact your credit rating and help you with any loan applications and negotiation with suppliers.

Banking

Have you spoken to your bank yet? How was it? Amongst our network we are seeing more consistency in support.  Remember you may not feel you need support at the moment, but be prepared with your business plan and forecasts up to date in case your situation changes.

Be sure to keep in touch with other finance providers as well to see what support they may be offering.

An important reminder to look at your bank covenants as well and understand your commitments.

Don’t forget – you can also get a 3 month payment holiday on your mortgage which could enable you to reduce the amount you need to take personally from the business.

How are you extracting cash from the business?

Don’t forget to monitor your ability to take cash out of your business by way of dividends.  Dividends can only be paid from retained P&L reserves and therefore if losses are being made over the coming months, do you have enough retained reserves to continue with dividend payments?  Especially at a time when you may be deferring the payment of liabilities, for example the next VAT payment, the cash at bank position may look strong but this is not the same as profit.  If P&L reserves are running out then consider your options relating to cash extraction.

Business rates rebate – check with your local authority

The business rebate scheme will be managed by your local authority, so be sure to visit your local authority website and ensure they have up to date bank details to pay your rebate.  The money is now starting to be paid out – make sure there’s no reason why you can’t access it if you qualify.

Don’t forget that the levels of uncertainty and change can wreak havoc with your stress levels. When working from home it can be difficult to separate work and home life, so be sure to take time out to clear your mind. Talk regularly and take advice on your decisions so you can be in the best place to accelerate out of this. And remember we are in this together.

Want to talk to us? Visit Wilson Partners home and get in touch.

 

Budget, Coronavirus, COVID-19, Financial Stimulus, Rishi Sunak