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BUSINESS SURVIVAL & GROWTH

THROUGH COVID-19 & BEYOND

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Cashflow

Cashflow

Cashflow gives you a different perspective on the business beyond the day to day. It often feels like an accountants answer to everything is cashflow cashflow. Approached the right way it can enlighten a business to how it can survive, where its real costs are and provide a light at the end of a tunnel.

CASHFLOW

A business necessity

DEFINITELY DO A

CASHFLOW PROJECTION

Project cashflow weekly (or daily), for the next 12 weeks. 

Project on Different Scenarios

If you're still generating revenue, find your cash breakeven revenue point.

Based on different scenarios, for example:

 

a) survival based on not paying your PAYE and VAT on time. 

b) to cover your PAYE and VAT, even if you don't pay them when due.

Cash IN

Customer & Client Cash IN

Be in touch with your customers and clients. Ask on payments dates.

Keep it friendly.

Politely say account 'on hold' for more services or stock, blame your bank/accountant/fd.

 

Find out early if there are going to be problems. 

Some businesses are paying on time or even early. Others are delaying, some are stonewalling (aka not replying). 

Shorter Payment Terms?

Consider where shorter payment terms can be requested, or are necessary.

For example: for customers with strong balance sheets (aka money in the bank); for new customers/clients/projects.

Faster Invoicing

Invoice as soon as you can. No delays.

If the process has unnecessary steps and takes too long, nows the time to re-engineer out those extra steps.

Debt Insurance

Check your debt insurance terms.

In case you need to claim.

If extending customers payment terms, or delaying chasing overdue payments, stay within your debt insurance allowed extensions terms, or contact your insurer.

If customers are overdue, you may need to inform your insurer at X days overdue. Otherwise, you may invalidate any claim you make later.

Consumer Cash IN

Crowdfunder - Pay it Forward

Loyal customers who want to see their local business survive, are using the Pay it Forward campaign, or buying vouchers direct from the business.

Consider taking card payments at ORDER point, instead of SHIP point.

Cash OUT

Suppliers Cash OUT

Communicate if there are going to be problems.

Understanding and forgiveness will be higher.

 

Avoid supplier's payment questions and they'll likely assume the worst.

 

Be kind now, these suppliers are your supply chain when things recover.

Lease & HP Payments

Consider seeking payment holidays.

Whilst on a payment holiday, no new leases can be taken out for new assets you need to buy.

Directors Duties

Bonuses & Dividends?

Delay paying any bonuses (due or not)

Even if business revenue/cashflow is steady, or even currently growing, we don't know how Coronavirus and the lockdown will progress, so it's prudent for cashflow to hold off paying. It's potentially bad RP to pay bonuses right now.

Consultant with employees.

Employees are highly likely to support a delay or no bonuses, supporting the business and their longer term job security. Note, unless the bonuses are in their employment contract, they are discretionary.

Same applies for dividends

Trading Whilst Insolvent

& Directors  Liability

The government has suspended wrongful trading provisions for three months from 1 March.

 

'In effect, they have given directors a green light to prioritise their business over the position of creditors while not being exposed to wrongful trading actions'

FRP Advisory, Directors Duties article here.

Check Gov.uk for Business Support

Gov.uk main page on support here.

In Summary: 

 

 - VAT payments for Mar-Jun can be delayed till March 2021.

You do not need to tell HMRC. More VAT info here.

 

 - Furloughing employees here

 

 - Self-employed grants here

 

 - Self-employed can delay paying 2nd tax instalment (due 31 July) till Jan 2021. You do not need to tell HMRC. No interest or penalties.

 

 - SSP paid for 2 weeks Coronavirus self-isolation, for businesses with less than 250 employees. Self-certification. Reclaim process tbc.

 

 - Retail, hospitality and leisure businesses - rates holidays and cash grants available.

Amy Newton, ACMA 
consultant
Supporting you
Sarah Platt, ACA 
consultant

Let's chat, click to book

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Hannah Sage, ACMA 
management accountant

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