Created: Wednesday, 18 March 2020 07:45
We would like to update our clients and any non-clients on our views and what we know so far in this uncertain time for the economy and in particular small businesses.
We as Chartered Accountants & Business Advisors are here to help and support you in any way that we can. We have already had lengthy conversations with understandably worried business owners and understand the strain Coronavirus is having particularly on small businesses.
It was announced that help would be available for any employers whose employees self isolate for 2 weeks with sick pay (£94.25 per week) able to be reclaimed from HMRC and therefore at no cost to the employer.
A £3,000 grant for the smallest businesses may be available through local authorities. It is not clear yet how and when this would be available.
People will be able to claim Universal credit and access advance payments without the current requirement to attend a jobcentre.
Cash flow for small businesses will be a major factor and with VAT, PAYE, Corporation & Self Assessment taxes due at various stages in the year HMRC have announced a dedicated helpline (0800 0159 559) which can be contacted in order to relieve financial pressure by setting up a bespoke Time to Pay arrangement.
The government is temporarily increasing business rates retail discount to 100% in 2020-21 for properties with a rateable value below £51,000.
HMRC has introduced a Business Interruption Loan scheme so that banks are now in a position to give further credit to small businesses with funds being made available to the value of £2 billion for Lloyds banking group and £5 billion from Natwest.
There have so far been no other major announcements regarding small business other than reassurance they would be supported in this time of need. We are anticipating there will be more news to be announced at any moment and will be monitoring this closely.
We are becoming aware of insurance companies stating in the event of a lockdown where business’s are being forced to shut they are not going to pay out for loss of earnings (although this may vary from provider to provider).
Our advice so far is to regularly check for updates on changes and to mitigate and cut costs wherever possible along with not entering into any unnecessary financial commitments with the near future uncertain.
If you have fixed employee costs these may need to be reviewed by talking to your staff about temporary layoffs or putting them on short time. Although we do not want to see any employees struggle financially, a short term temporary layoff is going to be a better alternative than pushing the business to the point it has to close in turn your staff permanently losing their jobs.
If you are finding yourself with surplus time due to activity reducing it is important to utilise this time wisely by getting admin/bookkeeping up to date, planning for worst case scenarios, planning for best case scenarios and even thinking of promotions/marketing and ways to generate revenue when things start to return to normal.
We encourage everyone more than ever to support and use your small local businesses and high street stores where available in this time of need.
Key next steps for your business
Plan ahead – Assess the best and worst case scenarios and what you can do in each event, this about cashflow first and forecast.
Financials - Keep on top of your bookkeeping, with businesses at risk worldwide it is important to keep on top of debtors to reduce the possibility of bad debts.
Communication - Communicate with all key stakeholders, speaking and being open with staff, increasing the level of trust and being as transparent as possible could be the key to survival.
Insurance - Check with your broker or insurance company if you can make a claim on your business continuity policy for any financial losses suffered.
Train staff - In case of prolonged staff absences from the virus, cross-train your key staff so that your business can continue to function at all times.
Slash Overheads - Look at all the costs of your business and reduce non-essential expenses, fixed costs such as wages, rent, utilities, financing costs and tax liabilities are not affected by a decline in sales and need to be properly managed and reduced where possible.
We are constantly monitoring this situation and when any news/updates become available we will we relay this on our face book page. If you do not already follow/like our page please feel free to do so to be kept up to date.
Together we can get through this!