It is odds on that our smaller clients are too busy trying to make a living to have had any disaster recovery plan in place prior to the outbreak of Coronavirus. To be honest, even large firms who may have developed a business continuity plan in the event of a catastrophic computer systems loss may not have considered the potential impact something as unexpected as the current pandemic. As accountants, we are well placed to consider the financial impact that this outbreak could have on each of our clients’ businesses.
Below are some thoughts as to what could be done:
1. Keep in touch
In any crisis, most clients are looking for a guide. You will want to know that there is someone there who cares about your business, so please be assured that we will keep in touch and ask that you do the same. The sooner that we are made aware of any problem, the easier it might be to solve, especially with reference to HMRC payments.
The earlier you get your accounts information to us, the easier it will be to plan tax payments. Speak to us before letting things get out of hand and don’t make any rash business decisions without first having a conversation with us.
2. Consider cashflow
Some of our clients are secure with regards to cashflow but some live hand to mouth, especially those with a fledgling business. There are ways in which cashflow issues can be eased, but more about that later.
3. Confirm tax bills earlier
In times of crisis, it’s always easy to defer such things as doing accounts, but this could be a good time for you to get on the case if you have been putting it off. It might be best to get your accounts out of the way and plan the tax bills coming.
4. Check out those in potential problems with HMRC
Are all your tax payments up to date? If not, are you aware of HMRC’s Time to Pay Service? All businesses in financial distress and with outstanding tax liabilities may be eligible to receive support. Also consider your July self assessment tax payment and speak to us if you foresee any problems being able to pay it.
5. Investment in capital items
Investment advisers say that you should have a cash pile of at least two months to weather any financial storm. Many clients won’t have two months set aside, but those that do and might have been considering making a large purchase such as a van could find that that the deals are more favourable now than previously.
6. Check insurance policies
Check any insurance policies you may have – would you, or your staff, be covered in any sickness claim? This is the value of having keyman insurance.
7. Government help
Make sure that you are up to speed with government guidance including the COVID-19: guidance for employers and businesses factsheet.
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
Funding support for those small businesses that pay little or no Business Rates because of Small Business Rate Relief
The Coronavirus Business Interruption Loan Scheme
8. Financial Help
Investigate what help is available from your bank, what terms and conditions there are, and whether the help is currently needed. RBS, Lloyds Bank and Barclays have pledged to offer support by mortgage repayment holidays, temporary increases in credit card limits, waiver of fees on early access to fixed savings accounts and late credit card, mortgage, and loan payments.
9. Supply chains
Make sure that you know your suppliers and their businesses well. Understand the supply chain to which you belong. Know who your alternative suppliers might be. Supply chain issues are already threatening to derail some small businesses. You may say ‘it’s OK I get my supplies from XYZ Ltd based in the UK’, but do you know where XYZ Ltd gets its supplies from?
10. Late payments
When cash is restricted, the temptation is to make late payments. This must be resisted, if only for reputational reasons. Late payments are already causing problems for businesses as 74% of business owners reported invoices due to be paid at the end of February had not been settled and were unlikely to be cleared before the end of March (business lender MarketFinance.com). Check your debtors. Review which clients are more likely to get into difficulty and suggest they pay your bill by instalments (if such arrangements are not already in place). Tighten up your invoicing processes.
11. Review business costs
Look at all costs and reduce discretionary and non-essential expenses as far as possible. Fixed costs such as wages, rent, utilities, accounting, financing costs and tax liabilities not affected by a decline in sales need to be properly managed. Suggest investigating whether costs can be spread rather than paying in one lump sum (e.g. car insurance).
12. Review marketing strategy
No one is going to do or buy much other than the essentials during this crisis and, although this situation might lead you or your clients to reduce costs by rethinking the marketing strategy, this might not be the right time – consistency is key to recovery.
13. Review mortgage payments
Banks will be lending cheaply. Consider remortgaging. Mortgages are based on past data, which will invariably be better for these past three years – defer applying and that may mean lending based on reduced profit figures making it more difficult to get a mortgage.
14. Carry on
It is vital that the business must at least give the impression that it is carrying on. This may be impossible if the business is a restaurant or part of the services industry, but is feasible for the many others who might have to self isolate. There are such businesses as Virtual Assistants that can help.
And finally, 15. look ahead
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. As Eliot Hoff, the head of APCO Worldwide’s Global Crisis Practice has said about the virus: “There will be an end to this, as there is with every crisis.” Original article by Jennifer Adams at AccountingWEB