Knowledge

Some helpful tips for your business in these uncertain times

In light of the current Coronavirus crisis, I understand a lot of you will no doubt have worries and concerns not only in regard to health but the current economic situation and the effect this may have on your business.

Most of you will know me as a big sports fan so with no sports on at the moment I have had to start talking to my wife. I just found out she was made redundant at Woolworths!

On a serious note though, the situation is constantly evolving as we are in uncharted territory.

I was the Finance Director for Alstom Power Netherlands BV during the financial crisis in 2008-09 and during this time I learned a lot and had some excellent support and experience with the top people at Alstom. I am sure with this experience I will be able to help and support your business in these critical times ahead.

In the Budget, the Chancellor set out a £12 billion package of temporary, timely and targeted measures to support public services, individuals and businesses through the economic disruption caused by coronavirus.

The DTI (The Department of Trade and Industry) has a dedicated support team to help small businesses and an email address to contact if you have any concerns. COVID19@trade.gov.uk

Here is a link to the DTI page which gives guidance for UK businesses. I recommend reading this and regularly visiting it to keep updated. https://www.gov.uk/government/publications/coronavirus-covid-19-guidance-for-uk-businesses/coronavirus-covid-19-guidance-for-uk-businesses

If you do need any financial support for your business during this time, then there are some useful links on this page.

RJF can also help as we have a relationship with local funders. They can help raise short term funding or help navigate some of the schemes the government has in place to support businesses.

I would like to share some practical tips for you that may seem obvious, but I think are worth highlighting and putting in practice for at least the short term. This is by no means an exhaustive list but just some useful pointers that may help.

Assess your Cash flow position. Prepare a 12-week cash flow forecast to see how long a runway you have with your current cash reserves, and expected outgoings. I can provide you with an excel template to help with this.

If you are thinking of getting extra borrowing or a short-term overdraft, look at getting this now. Even if you don’t think you need it now no one knows how long this is going to go on for and it is always easier to get borrowings and overdrafts when you don’t need it rather when you do need it. I am not recommending going into debt, but I think it is prudent to get facilities in place such as overdrafts, flexible business loans or loan facilities where you don’t have to draw down on but are there if you need it. We can help with this and put you in touch with our partners

Talk to your suppliers now and check how your supply chains are affected. It’s important if you are reliant on product and stock to fulfill orders that you establish if there are going to be issues particularly if you have paid upfront or a deposit on stock and your customer won’t pay until receipt of goods. There are options for stock financing that can help with issues like this. We can help by putting you in touch with funders who do this. If you think you are going to struggle paying some suppliers, from experience its key to start talking now. Be upfront, don’t put it off and just miss payment due dates. Suppliers will more often be happy to help as their main concerns will be not being paid at all.

Start talking to clients who owe you money. You may not like chasing money and when it is perhaps not due, even more so, but it would be good practice to start opening a dialogue with customers and confirm things like; are they happy with the invoice, has it been received, is it approved for payment, ask for a payment date. Get to understand if your client is having any issues. Depending on your profit margins it might be an idea to offer an early settlement discount to get paid sooner and reduce the risk of none payment and get the cash in. Or maybe offer installment plans now for a discount.

Xero has an automatic reminder service for clients who are overdue for payment. We can show you how to set this up. There is some other good automatic chaser software like Satago which integrates with Xero well. This costs £25 per month but can improve collections drastically. Go cardless, which we use to collect your direct debits, is a very good system to collect client payments. You don’t necessarily need to use it for monthly direct debits. You can have clients sign up for it. As all of you use Xero with RJF, it easy to set up and links with Xero and the invoices you raise. For example, you raise an invoice in Xero with a due date for 30th March, Go cardless will automatically collect that payment on that date if your customer is signed up to it. If you want any help in setting any of these systems up or if you want help with collecting your debt, we can help with this. We offer an outsourced credit control function which we can sign you up for on a short-term basis to help you during this time and once it settles down you can cancel the service.

I cannot advise on HR issues with staff, but I can put you in touch with someone who can if you would like to connect. However, in terms of staff payment and salaries, again it is important to start talking to staff now. Be open with them. I am not going to advise on what you should do with staff as I am not in a position too. However, in terms of cash and salaries its important this is managed properly, and cash reserves put aside if you can for important payments such as salaries, PAYE, VAT and any other taxes due.

If you think there are going to be problems with paying crown liabilities like PAYE and VAT then it’s important to start talking to HMRC now. HMRC are often open to helping if you have been paying your taxes up to date and will offer assistance even more so in the current climate. If you need any help with HMRC please do contact me. I have experience of dealing with HMRC and we also have partners that can help with this too. From my experience, HMRC can be difficult to deal with if you are not open with them and leave things to the last minute. As hard as it maybe it is always important to have an open dialogue with them in difficult times. It is not in their interest to make companies bankrupt due to overdue taxes. They need you to keep going to be able to generate profits and jobs so taxes can be paid!

Check your insurance policy. It may cover you for business interruption which pays out if your business is affected due to unforeseen circumstances.

We have seen economic disruption and crisis before, and we have all got through it albeit maybe with scars, but we got through it.

Please feel free to contact me with any concerns or questions you have regarding this. I am here to help.

All the best and stay safe!

Kind regards,
Rob