During this extended period of business disruption and widespread lockdown, we have been working to utilise our extensive knowledge of business operations to provide tips, advice and guidance on everything related to the COVID-19 pandemic.
In particular, Bill Liddell, one of our Directors, has been focusing on the financial impact that this pandemic is undoubtedly going to bring for millions of SMEs across the UK. With his background in underwriting and knowledge of business continuity, he has been regularly producing 'SME Survival Tips' for businesses to help ease the storm.
We have summarised a few of his tips, and shared them below:
1. Retain essential employees and use the furlough scheme if needed
Now that the Government’s furlough scheme is officially open, employers can now apply to furlough their staff members, with the Government paying 80% of furloughed employees’ wages, up to a cap of £2,500.
Before applying for this scheme, employers need to assess who are their essential employees and who are not. Securing the employment of crucial employees at this time is essential to business continuity.
When this has been ascertained - the decision to furlough remaining staff must be taken with further consideration, as this cash is likely to not be available for another 2-3 months. To apply for the furlough scheme, please click here.
2. Delay paying VAT, NI and PAYE
While this may appear obvious, it is crucial to the cash flow of the business to delay paying VAT, NI and PAYE at this time, in order to maintain finances. It is also advised not to pay rates over to the council until the business is in a position to trade under normal circumstances once again.
Similarly, for businesses that pay rent for properties, it may be beneficial to seek a rent deferment from landlords for the next few months to ease any financial pressures.
3. Renegotiate credit terms with business suppliers
Renegotiating credit terms with suppliers can be potentially difficult as all businesses are likely to experience some form of cash flow disruption during this crisis. If, however, the supplies are critical to the continuity of the company, extended credit terms are certainly a viable option in order to delay having to pay when cash flow is reduced.
4. Press for early payment from customers
While the majority of clients and customers will be reluctant to part with their money for the foreseeable future, offering incentives such as a discount for early payment can prove to be a quicker source of cash for businesses. It is much better to have most of the cash in the bank now than all of the money in 60-90 days.
To summarise, conserving cash, reducing the amount of cash that is leaving the business and controlling internal costs as carefully as possible are the most sensible ways of maintaining operations at this moment in time.
Bill will be uploading a series of SME Survival Tips on our Youtube Channel over the coming weeks. Please click here to watch some of his other videos.