Accounting for COVID-19: the fightback continues
As we head into what will be a testing time for many businesses, Business Control’s Richard Starkey offers some perspective and a few proven strategies for survival.
There’s no doubt that now is a critical time in what has been tumultuous year for business, but while there are some tough realities that need to be faced in the coming weeks, it’s not all bad news. There are positive options remaining for business owners and strategies that will help them weather whatever storm is yet to come.
At the time of writing there are just days left to apply for a loan via the Coronavirus Business Interruption Loan Scheme (CBILS), so if this has been part of your plan for survival (or even expansion), do not delay. It’s also worth paying close attention to any money you have claimed on furlough as I suspect HMRC will soon be turning its attention to auditing and will be checking that any payments that have been claimed for are correct. This is especially true for September, October and November when the employers’ contributions changed.
In a similar vein, it’s just been revealed that UK businesses have returned £215 million furlough payments to the Government so far, and it may well be that you didn’t actually need the funding either. Should you give it back? It’s certainly the right thing to do, if you can.
Local lockdowns seem to be part of the national strategy for containing the virus, and while they’re likely to be bad news for business, don’t forget that you can apply for a £1500 grant from the government every three weeks if your company is affected. The amount of the grant depends on the rateable value of your business premises and businesses with properties with a lower rateable value are entitled to £1,000.
We’ve not had a local lockdown yet in the Bath and Bristol areas, but it’s been tough going for some of our clients – one has had to reduce its workforce by a third. My advice over the past few weeks has been to stand back and take a good hard look at your business. Put your clients and your business under the microscope and see where the profit lies – and where the costly mistakes are being made.
Are some of your customers soaking away margin? Are the new customers you’re acquiring actually worth the time investment? Do you have particular customers that don’t fit with your business model anymore? These are questions that are likely to present you with tough answers – but you need to consider them.
Cashflow – as ever – should always be front and centre of your mind. Redundancy payments will be happening in October and November and this will have a huge impact on business’ ability to pay their bills. As always: keep a close eye on funds coming in and going out. Chase payments. Have a plan for recovering debt.
On the flipside, I have seen some businesses doing quite well. And these have tended to have been the ones that have put tight controls in place across their company – from marketing to HR and beyond. I’ve said it before, but the figures don’t lie. Keep an eye on costs, invest in the areas that are showing growth and you won’t go too far wrong.
I’d go so far as to say that, if you’re not noticing the pinch in your business now, it’s possible that you’ve weathered the worst (so far). The key now is to assess, plan and adapt. It may be that you have to reforecast each quarter and then each month within that quarter to stay on top of the situation, but forecasting in this way is going to be critical. It’s good stewardship and it may well steer your business into much safer waters.
Don’t forget to check out the rest of our Accounting for COVID-19 blogs here, and please check back periodically to get the very latest insight and information from the Business Control team.
