What’s your financial forecast?
Let’s be honest, very few of us saw what 2020 had in store. In fact, if I look back to the blogs I posted at the beginning of the year, one would be forgiven for thinking that the future for businesses looked positively rosy! I even referred to having 2020 vision – if only that were true!
In the absence of being able to read crystal balls, for many businesses, it’s been a case of acting ‘on the hoof’ – responding to the various rules, provisions and consequences that Covid-19 has presented.
Although the future is still unknown to a large extent, we do now have some knowledge to work with. So the big question is – are you ready? Now you’ve got through to this stage, have put plans in place for the coming months from a financial perspective?
Here are some of the areas that we are currently talking to our clients about…
The end of furlough
For many businesses, especially those that were forced to close their doors during the height of the pandemic, the furlough scheme has been a lifesaver. Whilst some businesses may have already been able to bring staff back from furlough altogether, there are others that may still be relying on the scheme to pay staff bills on a full time or part time basis. As businesses still using furlough will have to pay an increasing level towards staff wages over the coming weeks, and the looming closure of the scheme at the end of October 2020, there will likely need to be tough decisions made.
Where there is no prospect of a return to work for employees past the end of October, businesses will be forced to let staff go. Longstanding members of staff with a service length of over two years will be eligible for redundancy pay, which is a further cost that businesses will need to bear when they may still be struggling.
Changes to working patterns or practices
Lockdown enforced changes to the way many people worked, even if only on a temporary basis. Although some businesses will have taken steps to return employees to the workplace, there may be others with employees still operating on a remote basis.
There may therefore be conversations to be had with employees that want to continue remote working on a permanent basis, or those that would favour working fewer hours. Although a reduction in pay may not be suitable in all circumstances, some businesses may be able to utilise recent events as a way of reducing their overall staff bills.
Bounce Back Loans and CBILS
Thanks to Bounce Back Loans and CBILS, many business current accounts may well be looking relatively healthy at the moment, all things considered. But what are your plans going forward? How are you going to manage through the coming months towards the end of your financial year? Perhaps you have manged to defer some payments to see you through to now, but these will need paying at some point. The same goes for deferred tax payments.
Managing cash flow in times of crisis requires having a strong grip of your finances. Not every business owner is best placed for this and may benefit from outsourced support and advice.
For more information on our business consultancy services, which include financial management and cash flow planning, please get in touch.