Head Of Business Services Response to COVID-19

March 22, 2020

In these unprecedented times where business are facing severe challenges due to the Novel Coronavirus I wanted to give some reassurance to our clients by providing some practical advice in this ever changing economic environment in which we find ourselves.

First of all I wanted to let you know that our team are all fully operational and working from home and have been for some days. They all can be contacted by e-mail and if you would like to speak to me please call me on 07918 745135 or you can e-mail me at roger.duckworth@wardgoodman.co.uk.

As a business owner you will know that cash is the lifeblood of any business, without it a business will cease to operate. I have summarised below some guidance on how to manage your cash flow:

  1. Prepare a cash flow forecast for the next 3 to 6 months and include your expected incomings and outgoings.
  2. Prioritise the essential outgoings that enable you to continue to run your business and keep your supply chain running.
  3. Shelve all unnecessary expenditure for the time being. If you don’t need to spend it then don’t.
  4. Keep on top of your customers that owe you money by contacting them to make sure that they are still on track to pay you. It may be that you can work out an instalment plan with them rather than not receive what is due to you.
  5. If you have new business customers then credit check them first there are some agencies that do this for free and if you use digital accounting software such as Xero or QuickBooks online then there are some apps such as Satago which also credit check companies and provide automated debt collection services.
  6. If you subsequently find that your business can’t pay suppliers then the Chancellor has implemented some radical measures to help businesses which I will come on to in more detail later. This help may take some time to implement and if that happens then entering into negotiations with your suppliers, landlords, loan providers etc… may be necessary. It is very important that you negotiate a term that will not put your business under added pressure that ultimately you will not be able to keep up with.
  7. If you owe HMRC VAT, Corporation Tax and Personal Tax which isn’t covered by the Chancellors announcement about VAT and Personal Tax on 20th March, then you can contact HMRC for a time to pay arrangement. This has always been possible but now it should be a lot more straightforward to obtain. As with suppliers try to obtain a time to pay arrangement that you can afford. HMRC have provided a Coronavirus dedicated helpline 0800 0159 559.

You can do the same thing for your own personal finances. If you have a mortgage or loan then you could contact your lender to arrange a payment holiday and reduce unnecessary expenditure to prolong your own personal cash.

During last week and particularly on 20th March the Chancellor has announced a radical package of help for businesses and these are summarised as follows:

  1. Probably the most radical measure was the Coronavirus Job Retention Scheme. Under this Scheme all UK employers are able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. HMRC will reimburse 80% of these workers salary costs up to £2,500 per month. HMRC are currently urgently setting up systems to enable this reimbursement to happen.
  2. The deferment of VAT and Income Tax Payments was also announced. VAT payments have been deferred for 3 months. This applies from 20th March until 30th June and all UK business are eligible. The deferment is automatic and VAT paying businesses will be given until the 5th April 2021 to repay any VAT deferred.  The July Self Assessment payments due on 31st July 2020 will be deferred until January 2021. If you are self-employed you are eligible and it is automatic and requires no application.  HMRC have also scaled up their Time to Pay arrangements to all firms and individuals who are in temporary financial distress as a result if the crisis and have outstanding liabilities.
  1. HMRC are bringing in legislation to allow small and medium sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness due to Coronavirus. The refund will cover up to 2 weeks SSP per eligible employee who has been off work due to Coronavirus. Employers with fewer than 250 employees will be eligible and will be determined by the number of people employed at 28 February 2020. Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of Coronavirus.
  2. For businesses that pay business rate and belong to the retail, hospitality and leisure sector will receive a business rates holiday for the 2020/2021 tax year. You are eligible if you are based in the UK and belong to the industries listed above. Your local authority will reissue your bill.
  3. The Retail and Hospitality Grant Scheme will provide businesses in the retail and hospitality sectors a cash grant of up to £25,000 per property provided the rateable value of that property is between £15,001 and £25,000. If your rateable value is under £15,000 then the grant available will be up to £10,000. You are eligible if your business is based in the UK and you belong to the sectors listed above and your premises are used wholly or mainly used for the eligible purposes. You won’t need to do anything to apply your local authority will contact you if you are eligible.
  4. If you pay little or no rates due to Small Business Rate Relief or Rural Rate Relief then you will be able to obtain a one off grant of £10,000 through the Small Business Grant Scheme. You are eligible your business is based in the UK and you are a small business that receives the above reliefs and a property occupier. You do not need to apply your local authority will contact you if you are eligible.
  5. The Coronavirus Business Interruption Loan Scheme will provide access to bank lending and overdraft facilities to small and medium sized businesses. The government will provide lenders with an 80% guarantee on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to Small and Medium Sized Enterprises. The government will not charge businesses or banks for this guarantee and the scheme will support loans of up to £5m. Businesses can access the first 12 months of that finance interest free as the government will cover the first 12 months of interest payments. You are eligible if your business is in the UK and the turnover of that business is less than £45m and you meet the British Business Bank criteria which can be found along with more information by following this link https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/. The scheme will commence from 23rd March 2020.
  6. For larger businesses the Bank of England will buy short term debt under the Covid-19 Corporate financing facility. All UK businesses are eligible and the scheme will commence from 23rd March 2020. More information can be found by following this link https://www.bankofengland.co.uk/news/2020/march/the-covid-corporate-financing-facility.

The above is a fairly detailed summary of the support that the government is providing businesses at this difficult time. The full detail can be obtained by following this link https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses.

This is as I have already mentioned a difficult time, but it is important we as business owners do not panic and make decisions that we cannot easily undo. If you follow the steps above you will then understand your financial position and then will be able to make better informed decisions and access the help you need.

I hope that this article has been helpful but if you need further advice or assistance please contact me on the number above or one of my team on 01202 875900.

That just leaves me to wish you all the best of luck and try to remember that this crisis will be over one day and things will return to normality.

 

Roger Duckworth

Head of Business Services

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