Biz Extra

Published: March 17, 2020 | Updated: April 19, 2020

Inspire’s Finance Clinic: Helen Holman, Associate Director, answers your questions

Helen Holman, Inspire’s Associate Director.
By Andrew Diprose, editor

Helen Holman, Associate Director of Inspire, the business and tax advisers, answers your questions.

Coronavirus is the biggest challenge facing many businesses for years so this first Q&A is devoted to the current crisis.

Question: I’m worried my business will run out out of money. What can I do?

Answer: Cashflow is absolutely vital so prepare a detailed cash flow forecast, which you can track on a daily basis. Start by performing a detailed review of the business’ commitments, when do suppliers, landlords, HMRC and employees need to be paid?  Which of these payments could flex?

Dig out your loan agreements and read them thoroughly. What is your best, medium and worst case scenario with regards sales income, which of your customers are at risk, what behaviours are you seeing already? In preparing the forecast, you need to consider the next ten to 14 week period (to the peak of the outbreak) and beyond – I suggest 12 months. Realistically, business confidence will take time to recover.

Consider practical steps to defer cash payments.  The government has announced a package of measures to support businesses. Among these is a HMRC helpline for businesses and individuals who are unable to pay their tax due to the virus. Help could include the agreement of a deferral period.  The HMRC helpline number is 0800 0159 559.

Question: Should I contact my bank for further help?

Answer: Further assistance could be available from your bank. Banks will look at a business’ requirements on a case-by-case basis and decide how much and what type of assistance could available.  Banks may be able to offer loan repayment holidays and the Coronavirus Business Interruption Loan Scheme (CBILS) will become available in the coming weeks. Speak to your bank contact to assess your options.

An important note of caution here, if your business was trading poorly or making losses before the virus, then the banks may find it hard to help you.  If this were the case then a conversation with an insolvency practitioner is advised to ensure that you are honouring your duties as a director and are not putting yourself at risk.

Question: I’m literally having sleepless nights worrying about the people I employ. Do you have any specific advice?

Answer: Leading a team through periods of uncertainty is a huge challenge. Not only must you ensure that you have the right level of resources to fulfil your customer/client needs, sickness absence is likely to increase and be disruptive, you must manage the wage bill from lower levels of income and try to keep up the team spirit.

Good communication is essential, keep your team updated as much as possible and consider how you will communicate with employees, especially if you need to contact them urgently. Review how you might resource the business innovatively to keep essential operations ticking over:

  • Think through the tasks which could be performed from home.
  • Look at identifying key services and staff with transferable skills.
  • How can you keep the team communicating?
  • If your operations are severely affected, consider introducing a voluntary special leave policy on a temporary basis whereby individuals can opt to take paid or unpaid leave. Be mindful that there could be some employees who are willing to take additional time off and welcome a break, but others may struggle financially if they lose pay.
  • Consider offering a shorter working week or other flexible resourcing arrangements, and communicate the business reasons to employees.

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Got a question for Helen? The team at Inspire has much experience at advising business owners in good and more challenging times. Call 01202 717867 or email info@inspire.uk.net.