Plan for recovery
- 14th April 2020
If it is not possible to call on approaches to similar events, then what can we do to try and minimise the impact of the current crisis and put our businesses in the best possible position to survive and thrive in a post-Coronavirus world?
Uncertain and unprecedented
At the risk of stating the obvious, none of us have ever been through anything like this before. This makes it extremely difficult to call on past experiences to help navigate through the troubled waters of the next few months.
Of course the impact on businesses and individuals has, and will, vary enormously. Some are struggling to cope with meeting demand while others have faced a total loss of income with no warning. Many will fall in between these two extremes.
If it is not possible to call on approaches to similar events, then what can we do to try and minimise the impact of the current crisis and put our businesses in the best possible position to survive and thrive in a post-Coronavirus world? There is clearly no one simple answer, but there is one simple approach. Get back to basics.
Use time constructively
Many business owners will find themselves in the extremely unusual position of having time on their hands. This time can be used to carry out a top-to-bottom review of your business with the initial emphasis on surviving the short-term challenges but then moving on to consider how to make the business successful.
Here and now
The old cliché in business that Cash is King has never rung more true. Now, more than ever, you will need to manage it effectively.
Like everybody else you will be aware that there is a range of support measures that have been put in place by the Government to help businesses. If you are not clear on what the different measures are, and how they might help your business, a good starting point would be to keep a regular eye on our Coronavirus information page here. You can also contact us to discuss your particular circumstances and how the available help may be accessed. However please be aware that this is still fast moving legislation and any advice given will be based upon our understanding of the rules as they apply at a particular point in time.
It is important not to just sit back and hope the Government support will sort out all of your cashflow problems. As a starting point make sure you maximise the cash coming in. If your customers can afford to pay, you make sure you chase them to pay in accordance with the agreed terms and conditions. If necessary arrange for payments to be made in instalments over as short a period as possible. This is clearly going to be a sensitive area as many businesses will be feeling the same pain as yours. However this does not mean that you should simply give up on trying to collect money due to you.
Quantify how much you are going to have to pay out over the next three months on a monthly basis. This will include amounts where you have no option e.g. payments to staff who are working or who have been furloughed, along with, potentially, things like rent and utilities. Although it may be possible to agree terms with your suppliers do not simply fail to make payments. Talk to them and explain your circumstances, and if possible make at least some contribution to the amount owed. Remember you will want to work with them in the future so being fair and reasonable now will help protect the relationship.
Having identified how much cash you are able to bring in to the business and how much you are going to have to pay out, you will be able to calculate how much, if any, you will need to borrow to get by. At this stage consider all options available to you and not just the Government-backed schemes. For instance the use of asset finance may prove a better long-term option. Remember that there are lots of alternative providers of finance and it is now more important than ever to find the right one.
Once you have a good idea of what your financing needs are going to be, there is one absolutely critical factor to consider. Can you afford the repayments?
Remember that deferrals of VAT and income tax payments on account are just that, and they will eventually become payable. In addition bear in mind that the Government’s 80% guarantee on loans is to the lender, not the borrower. They will not bail you out if you are not able to repay the loan.
Here to help
Finally remember that while our offices may be closed we are still actively available to provide help to clients.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.