In the second of our series of accounting blogs Derek Swift, director of Richardson Swift, offers some practical tips for local businesses to ensure they’re in the best shape possible to make it out of the crisis.
Planning for beyond the lockdown
The current furlough scheme and other government assistance are allowing most businesses to hold their current position, but the real challenge will come when the lockdown is eased. In our view, businesses need to be planning for this now as it’s likely that strategic decisions will need to be made before then.
How to plan ahead
Management teams should be creating a financial model/cash flow forecast based on how they think their business will perform coming out of lockdown. Currently, we don’t know how the lockdown will be relaxed and when measures will come into effect, but it’s possible to prepare a base model that can be flexed easily when the precise details are known.
In order to do this, businesses will need to consider the following points:
1. Forecasting – on reopening, how quickly is your turnover likely to recover? This will depend on several factors, such as the impact of consumer confidence and ongoing social distancing, plus where you are in the supply chain.
2. Staff – unfortunately, for many businesses the restart is likely to be slow and you may not need as many staff as you had previously. Owners will need to strike a careful balance between achieving operational efficiency and maintaining standards/service levels. As part of this review, you’ll need to factor in redundancy/notice costs. Also, consider making these staffing decisions during the furlough period, where possible.
3. Finance – using your forecast, you should be able to calculate the cash needs of the business for the remainder of 2020 and consider what finance is required. This is where government-backed loans could prove very valuable. Although some loan applications are being turned around quickly (four days is our current client record), many are taking weeks and then failing, so it’s worth planning ahead. You should also ensure your financial records are kept up to date to avoid any delays with future loan applications.
4. Innovation – is it possible to adapt the way your business operates to better serve your customers/clients throughout the lockdown and beyond? This could include updating your website, moving to online sales, changing delivery options or improving IT for staff working remotely. If some form of social distancing becomes the ‘new normal’ (as seems increasingly likely), businesses should be implementing these changes as soon as possible.
How we can help
Cash flow projections and financial planning have never been as important as now. The businesses that survive the lockdown will have a clear understanding of their needs and be able to model any changes quickly. These forecasts will also be requested by banks in relation to any future finance applications. We have expertise in this area and can help you prepare these figures, along with any other financial information that’s needed.
Additionally, our team specialise in Cloud Accounting and work with many online apps/tools that give you a clearer picture of your finances and automate key tasks. Now is the time to review your IT efficiencies and we can assist you with this to ensure you stay on top of your numbers when it matters most.For further guidance, or for information about our business support services, please see our website, or contact Derek Swift on 01225 325580, or email: email@example.com