Chris Downing, Director of Inspire, the business and tax advisers, answers your questions

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My business is struggling with cashflow at the moment, what should I do?

The first thing to say is that you’re not alone!  One of the biggest challenges for many businesses now that the restrictions have begun to ease and customers are starting to return, is cashflow management.

If your business has been closed or your order book heavily impacted by Covid, you will need cash to get the ball rolling again.  You will likely need to be providing goods and services to customers immediately, but won’t be seeing payments often for 60 – 90 days.

• As a priority, make sure that you have your costs under control.
• Categorise your overheads into those that are vital to business operations and those that are discretionary or even luxuries. Question the latter and do they give you a return or benefit?
• With the furlough scheme coming to an end in September, many businesses have been closely scrutinising their ongoing payroll costs and may still need to make some tough decisions about people’s roles going forward.
• Forecast, forecast, forecast! Try predicting what the future cash looks like to the best of your ability. Cashflow forecasting can be as complex or as simple as you need it to be. One page or several pages, as long as it tells you what you need to know; with the forecasted level of activity what will the bank balance look like after taking into consideration predicted receipts and payments? A number of commentators talk about a thirteen-week review period. I agree with this, but feel that consideration should also be given to weekly and annual forecasting too. With the information that you have at present, what is your bank balance predicted to be at the end of the week, at the end of three months or even at the end of the year?
• Having considered your forecasted cashflow requirements, do you have the correct level of funding in place? Talk to your advisors including your bank manager, who will be able to walk you through this thought process. It’s important that the right type of funding is in place in terms of structure and of course, pricing! Simply having an overdraft is not always the answer.
• The government’s Recovery Loan Scheme is still available if you do need to secure additional funding. You can read our advice on making a RLS application here, alongside other advice and options for funding your business.

There’s more details on forecasting here, or you can listen to our 2 + 2 podcast episode with advice and tips on funding and cashflow.

My business has re-opened, but I still have some staff on furlough, what do I need to know?

• The furlough scheme is available to use (for existing employees) until 30 September 2021, although the government’s contributions will start to reduce from next month.
• From 1 July employers will need to start topping-up employees’ salaries for their hours not worked, in addition to the existing National Insurance and pension contributions that need to be made currently.
• For any hours not worked during July, employers will be required to contribute 10% (up to £312.50) per employee – meaning that the employee will still receive 80% of their wages, but only 70% will be provided by the government.
• The top-up required from employers for any employees on furlough (or flexi-furlough) during August and September will increase to 20% (up to £625 per month) for any hours not worked.
• We’ve provided a handy reminder of the key dates for submitting furlough claims and levels of employer contributions required here.

I am self-employed, when will I receive the next grant?

Details of the government’s fifth and final Self-Employment Income Support Scheme (SEISS) grant have recently been published.

•  The final grant covering the period May to September 2021 will be open for claims from July.
• As with earlier stages of SEISS grants, in order to qualify you must have been trading in the tax years 2019/20 and 2020/21 and for this grant, you must have submitted a tax return by 2 March 2021.
• The amount you can claim will depend on how much your turnover has been reduced by in the period from April 2020 to April 2021. For example, if you’ve seen a reduction in turnover of more than 30%, you can claim 80% of 3 months’ average trading profits, up to a maximum of £7,500.  If the reduction in turnover was less than 30%, you can claim 30% of 3 months’ average trading profits, up to a maximum of £2,850.
• More details on the claims process and timeframes can be found here.