We’ve never experienced a period of uncertainty and disruption like the one we’re living through now.
Up and down the country, business owners and their employees, suppliers, clients, customers and professional advisers are adapting to new challenges and restrictions on a daily basis. Then there’s the measures that are being put in place to help, but its taking some effort to understand exactly what the help is, who’s eligible and how you apply, not to mention trying to work out if it really is the right long-term option that it might seem amid the chaos. All of this alongside the growing realisation that COVID-19 will continue to have a huge global impact long after lockdown is over. The pressure is on.
At times like this, keeping your head and making informed decisions is crucial.
Cashflow is the most important thing for nearly all businesses. Without cash you can’t pay wages or suppliers, which may eventually result in a going concern issue. Using “What if” cashflow scenario planning can really help you understand the impact of your decisions or actions on cash if, for example, there’s a fall in sales or you have to temporarily reduce working hours.
Now that a huge number of workers are unable to go into their workplaces, the benefits of remote access are obvious.
Businesses that are on cloud products like Xero or QuickBooks are affording their owners immediate access to accurate information at the touch of button, regardless of where they are. Cloud businesses are still carrying out their necessary financial duties, continuing to chase debtors and pay suppliers. For accountants, using products like MyWorkpapers also means there’s no need to rely on paper files for accounts preparation work, so your work can continue as normal
The bigger benefit of being on the cloud is that it gives you access to so many other apps that integrate perfectly with your accounting system. A number of forecasting tools exist so that you can quickly prepare 3-way forecasts and see the impact to profitability and to cashflow following a decline in activity. At Sagars we use bespoke software called Pulse to carry out scenario planning, so that our clients have access to accurate information, which helps them make the right decisions. We can also prepare bespoke management information to focus on the KPI’s that matter to you, and which will become increasingly important going forward. Trends can easily be picked, so well-informed decisions can be made and implemented.
Whilst preparing forecasts for varying scenarios is extremely important, it doesn’t help you get the cash in. If you can’t get into your office are you still able to chase your debtors? If you raise your invoices in your cloud accounting software, then the answer is yes. You can continue to chase debtors by emailing clients or picking up the phone, but to improve your cash collection, connecting to an app like Chaser could increase the speed at which you get paid, as well as reducing the time you are spending on credit control. Chaser is a fully automated credit control app that will save you valuable time and allow you to concentrate on other parts of your business.
Let’s assume that you’ve prepared your forecasts (or worked with your accountant on them) and chased your debts, but still identified that cashflow could become a problem due to a decline in activity. You’ll want to do everything possible to avoid reducing your employee’s wages or making redundancies. At the end of the day, everyone has bills to pay and you’ll still need your employees when we come out of the other side of Covid-19.
The government has announced a range of support measures that might help, including the Business Interruption Loan Scheme and the Job Retention Scheme for Furloughed Employees. There is also the deferment of the current VAT liability that will help many VAT registered businesses. If you still need alternative options, your accountant may have signed up to Capitalise, a great app that can access funding from 100+ lenders to help you get the best deal possible. Other apps that can provide instant decisions on funding are IWOCA and Satago. With instant decisions, they could plug any shortfall while it takes time to get everything back on track, just make sure that you understand the long-term impact of any funding.
If you want to understand how any of the cloud products or apps might benefit you, please get in touch with Paul Lodder.