By Be the Business

1. Your coronavirus cash conservation checklist

The critical thing right now is that small and medium-sized businesses conserve cash at all costs. With so much uncertainty around how long the impact of coronavirus will continue for, cash is what will decide if and how your business gets through the outbreak.

To help, we’ve put together some suggestions, based on advice from government and industry experts. These are suggestions. You’ll need to decide what’s best for your situation and ensure you’re meeting all legal obligations.

1. The government has announced that businesses are able to defer VAT payments for April-June until January 2021, so keep hold of it for now.
2. Contact your lenders to discuss putting your personal mortgage and other debt repayments on hold – most lenders are being helpful on this front. However, it is important to understand the implications of this as the repayments will have to be paid eventually
3. Cut personal and business expenditure to a minimum – go through all of your costs line by line to see what can be cut/put on hold. See if you can negotiate deferment on your utility bill payments.
4. At present HMRC will consider deferring payments for corporation tax, PAYE and/or CIS where the business is affected by the virus, so get in contact to see if you are able to take advantage of this. Waiting times to speak with HMRC are understandably high right now, however.
5. If, further down the line, you are still struggling to make VAT, PAYE, corporation tax and other payments, the government’s Time to Pay scheme allows you to set up instalments.
6. Negotiate a rent holiday/deferment from your personal/business landlord.
7. Talk to your creditors and build a relationship to make sure they are not putting you under pressure. They will want to keep you as a customer.
8. Make use of the furlough provision if you can for your staff (but remember you don’t get their pay back until after you’ve run payroll).
9. Find out what grants you can get from your local council – the chancellor has said that funding has been transferred to all the local authorities.
10. Cut bonuses and commission across the business. Make sure you’re leading by example and cut yours first. There are some great examples of business leaders taking big cuts or even forgoing their salary for the next three months.
11. Talk to your staff and involve them in your efforts to conserve cash. Get their ideas on how you can pivot and generate income.
12. Apply for the Coronavirus Business Interruption Loan Scheme as soon as you have your accounts ready and your cash flow forecast done.
13. Review your marketing: stop activity through any channels which are not relevant in the current climate.

Staff cost reduction: Your options

To cut staff costs in order to survive the coronavirus pandemic, there are a range of actions that many affected companies are either implementing or considering. Please bear in mind that you can only impose the first four with the consent of employees. Without agreement, you risk breach of contract tribunal claims. So please talk to your staff and try to get agreement.

1. Furlough leave: This is mandatory time off work, where permitted by law, covered by the UK government’s Coronavirus Job Retention Scheme.
2. Unpaid leave: Seek volunteers to take unpaid leave for specified periods, often in excess of normal company restrictive leave policies.
3. Pay/benefit cuts: Ask workers to take a temporary cut (you still need to pay at least the National Minimum Living Wage) in order to prevent job losses and business closures.
4. Reduction in staff hours: Ask workers to volunteer for a temporary decrease to their working hours during the pandemic.
5. Requesting holidays: Ask workers to take their holidays during home isolation periods in order to ensure a full workforce to help rebuild the business post-pandemic.
6. Releasing contractors: Terminate contracts for temporary workers where permitted by the terms and conditions.
7. Redundancies: Where furlough isn’t an option, reduce headcount by offering redundancies within your worst affected business functions.
8. Mothballing: Temporarily close your businesses or significantly reduce operations to minimise all expenditure in the hope that customer demand and workforce levels will return to normal in the near future.

2. Coronavirus: Managing your supply chain during the outbreak

Almost every business, regardless of its sector or location, is feeling the impact of coronavirus (COVID-19). For some it’s causing a spike in demand. For lots of others it is bringing challenges around supply of resources and people. The scale of the pandemic and the rate at which it is evolving means that almost all businesses are facing challenges when it comes to managing supply chains. 

They tend to be multi-layered and have numerous interdependent parts. It can make it difficult to fully understand and prepare for shocks to the system like the current one.

However, there are things you can do to reduce the impact to your business as the current pandemic continues.

The two most important steps you can take are understanding your current exposure – what are the elements in your supply chain that are already being affected and what can you do to address or change them. You should also take time to think ahead and plan for other future impacts that could present challenges for your business as the pandemic continues.

5 things you can do (right now) to manage supply chains

Know all the details about all your suppliers

Make sure you know who all your suppliers are and assess their ability to meet your existing agreements in the current situation. Wherever possible, be clear whether they create the goods or components you buy from them, or whether they rely on others. Having as much visibility as possible on this will help you identify potential challenges and plan alternative options.  if you need to find new partners, the Department for International Trade can help you. It has relationships with a global network of businesses across the world and will be able to advise you on the options available during the pandemic.

Estimate realistic demand and assess available inventory

For some businesses, coronavirus is causing spikes in demand. For others it is already or will cause a sharp decline. Keep in regular contact with your suppliers and customers to understand the changing picture and plan accordingly. Review contract terms with customers and suppliers – which contracts could be terminated as short notice? Where might you incur a late delivery penalty? Understand the status of every single contract you hold.

Know what restrictions on imports and exports have been brought in and how they affect you

In response to the coronavirus outbreak, governments around the world have closed borders and placed restrictions on non-essential travel. Know what interventions have been put in place and how they might impact your ability to import or export goods and services. If you need financial support, UK Export Finance (UKEF) works with banks and insurance brokers to help companies of all sizes fulfil and get paid for export contracts. It is supporting businesses impacted by coronavirus including through loans and guarantees.

Map future scenarios and make a plan to manage them

Expect the unexpected, especially when core suppliers are on the front line of disruptions. In the case of the coronavirus pandemic, China’s influence is so wide-ranging that there will almost inevitably be unexpected consequences. Take time to think ahead and map future scenarios and challenges – what are they and what action could you take now to minimise the impact on your business should they materialise? Monitor for early warning signs, such as requests for changes to payment terms or a reduction in communication from your suppliers.

Don’t forget your people and the people at your suppliers

People are a critical resource and the health and welfare of employees is paramount. As the pandemic continues, it might be necessary to rethink working practices. These might include remote working or working from home, increasing automation, changing existing shift patterns or introducing new ones. Remember that your suppliers will be going through exactly the same decisions and this may impact their ability to deliver to you.

3. Take inspiration from a business that successfully applied for the Business Interruption Loan Scheme

Barry Leahey successfully applied for funding through the Coronavirus Business Interruption Loan Scheme (CBILS). He talked us through the steps he’s taken as MD of Playdale Playgrounds since lockdown and the approach followed to make sure his loan application was reviewed with minimal pushback or delay.

The same approach won’t guarantee you a successful loan application, but it could speed up the process and help you give your application every chance.

Read Barry's story here.

Note from Buckinghamshire Business First

Have you had a positive experience of a government-backed COVID-19-related scheme? If you would like to write a blog or share your experience with us, please email us at [email protected] and we will be in touch with the next steps.

Business hub for COVID-19 support

Remember to visit our COVID-19 business support hub for the latest information and support.