Covid support measures are coming to an end. Is your business ready?
It’s needless to say that the Government’s support measures have been a lifeline for businesses across the UK over the past 16 months. At the peak of the pandemic over 11 million people were placed on furlough through the Coronavirus Job Retention Scheme, and a huge £25 billion has been given out through the Self Employed Income Support Scheme so far.
And even though the return to (somewhat) normality will be a sigh of relief for many business owners, it’s even more crucial to start forward planning now, with the support measures drawing to a close within a matter of months.
I’ve outlined some of the steps that business owners should be considering when planning ahead to help ensure that they’re placed in the strongest possible position.
Create a clear cashflow forecast
With the support measures ending, having a clear and robust cashflow forecast is vital for your business strategy and decision-making process.
There’s no one answer when it comes to creating a clear forecast, it really depends on your business. But there are 5 key points I tell clients to keep in mind when creating a cashflow forecast:
- Understanding your cash - Knowing when and where your money is coming in from and going out to is vital. Being as methodical as possible here, and really drilling down into your incomings and outgoings, goes a long way in creating a strong forecast.
- Knowing your industry and market – Keeping the bigger picture in mind, and having a clear understanding of what’s going on in your industry and in your market is crucial for creating the most accurate forecast possible.
- Time frames can vary – If you’re benchmarking your forecast against other businesses, it’s important to remember that cashflow really varies between industries. If you’re in retail you’ll typically get paid as soon as you make the sale making cashflow much quicker, whereas if you’re in construction, you might not receive payment until the project is completed, whilst still paying for materials along the way.
- Planning for different scenarios – No matter how much you plan, it’s impossible to predict the future. So, having different forecasts for the best- and worst-case scenarios will place you in good stead to adjust your strategy and plan no matter what the outcome is.
- It’s an ongoing process – Reviewing your forecast with your budgets, plan and actuals in mind, is key.
Cloud accounting systems can really lend you favour here, by streamlining your data and giving you access to real-time information and even offering add-on forecasting apps, to help you create a really robust forecast.
Unlock trapped cash in your business
Even though the grants and funding that your business might have been relying upon over the past year are ending, there could be trapped cash sitting within your business that you’re not even aware of.
Whether it’s Research and Development Tax Relief (R&D) and Patent Box, or more sector specific incentives like Creative Industries Tax Relief and Capital Allowances, tax relief can provide a significant cashflow injection to help ease your cashflow.
Recent measures for the R&D scheme also mean that if your business was making a profit before the pandemic and has since become loss making, you can carry back your losses over three years rather than one, which can in some cases significantly increase the size of your R&D claim.
If you are considering this as a route, we’d always recommend consulting an advisor before submitting a claim. They will not only ensure that you’re getting the most out of your claim, but they will also be able to assess whether the relief could have a potential knock-on effect on any of your other grants and funding.
Consider hybrid working
Working patterns have changed dramatically since March last year, to an extent which none of us could have imagined at the start of 2020.
With furlough ending and recent stats showing that 85% of employees are interested in continuing hybrid working, adopting a more permanent hybrid working model could be the next step for you and your team.
The benefits of hybrid working in this climate are far-reaching. Allowing more space to keep your team safe during the pandemic, and potentially improving your team’s engagement by offering a level of flexibility which commuting and office interruptions hinder.
Whilst the list of advantages of hybrid working goes on, there are still considerations to keep in mind before rushing to change your working patterns before furlough ends.
- Your office space – Many businesses are now reflecting on whether they can cut down overheads by downsizing their premises with less people in the office at any one time. This might be the answer for some, but with the all the extra space it could be a good opportunity to create more social and collaborative spaces for your team.
- Hot desking – Whilst hot desking might be the perfect solution for your hybrid working model, it’s worth keeping the logistical considerations front of mind. Is your business fully equipped to be able to hot desk smoothly? Do you have the technology to allow your team to book their desks and phone systems that work efficiently? And even though restrictions are lifting, we’re still not out of the pandemic, so ensuring that hot desking is done in the most covid-friendly way possible is crucial too.
- Collaboration – Sometimes working with your team over Zoom and Teams isn’t as effective or productive as round-the-table meetings. So, it’s vital to ensure that collaboration and innovation don’t suffer on the days that your team isn’t together in person.
- Meeting your teams’ needs - Hybrid working might not work for everyone in your team. Having an open and honest discussion with everyone in your team before drastically changing their way of working can go a long way. And to work best, hybrid working needs to be tailored to individuals or teams.
Is it time to review your systems?
With hybrid working here to stay for many businesses, now is the right time to be reviewing your accounting systems. If you haven’t already made the move on to cloud accounting, it can offer a real opportunity to completely transform the way you work.
Giving you access to real-time data on any device, cloud accounting software allows you to work with your team and your advisors from any location. This means that you can run your business from anywhere, whilst also making working together much easier.
Getting set up is quick and easy, and can even be done remotely. Your advisor should be able to help train you in the software and ensure that you’re getting the most out of it.
If you’re already set up, it’s worth questioning whether you’re really maximising the software. With thousands of add-on apps, you can do everything from automating your billing and linking up to your bank account, to scanning receipts straight from your phone and sending invoices directly to your clients over email.
Where to go next…
For business owners across the county, the support measures have undoubtedly been a saving grace. But with the end of the measures firmly in sight, now is the time to start working with your advisors and planning for the months to come, to ensure that your business is in the most resilient position possible.
Whether it’s helping you to create your cashflow forecast, assessing your eligibility for tax relief, or helping to place you in the strongest position possible to face the coming months, our advisors are here to support you every step of the way.