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Your coronavirus cash conservation checklist

Cash conservationThe 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.

Source: Corona Business Advice Group are a group of five SME specialists in finance, marketing, leadership and law, sharing free, practical and professional advice every day. SMEs are also sharing regional tips and success stories via the group’s Facebook page.

Listen to our ten-minute interviews with real businesses like yours, where leaders discuss key coronavirus themes such as furloughing, pivoting the business, cutting costs, negotiating with landlords and what it all means for the future.

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