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Cash flow is pivotal, it is the life-blood of your business. Monitoring cash flow is akin to taking your temperature; it provides an instant indication of your business health.

For most businesses, the present coronavirus disruption has the potential to drain away your cash reserves. The process is fairly straight-forward: sales decrease whilst the overheads you have accumulated to sustain higher volumes of business still have to be paid (payroll costs, rent and other fixed costs that do not drop when turnover drops).

Although government has stepped in with stop-gap grants (the furlough and rates reduction schemes for example) the lock-down has depressed not only social mobility, but also our willingness to spend. The result, demand for our goods and services has largely evaporated.

What to do?

It is fairly evident when cash resources are dropping, but this is a real-time, snap-shot of the current situation. What is your forecast of cash reserves? How much will be in your bank account next month, in three months, in a year’s time?

If you are going to manage your cash flow these forecasts are crucial. Without them, it is like driving in the fast lane of a motorway with your eyes closed. Our advice:

1. Use cloud based accounting software.
2. If necessary, subscribe to a cash flow modelling APP that will work with this software, and
3. Review the forecasts produced on a regular basis.

We can help

If you are concerned about your cash position as we emerge from lock-down, please call so we can discuss your options with you.

Business solvency is simply defined as more assets than liabilities. During the COVID lock-down period many businesses may have experienced a drop – or elimination – of their sales. As there are overheads that still need to be paid those affected may have traded at a loss.

Losses reduce your assets – as cash resources, money due from customers and stocks reduce – and liabilities increase, for example taking out loans to tide you over.

This reduction in assets and increase in liabilities reduces any retained profits and capital invested in your business. When these reserves are exhausted, you become insolvent.

Which is why, during these unprecedented times, monitoring your finances to determine solvency is so important.

We can help

Producing accurate management accounts each month will highlight your net worth and reveal if solvency is going to be an issue for your business. We can help you set up systems to do this or process your accounting data for you. Either way, this is a task that should not be overlooked.

With this information we can help you create strategies to keep your business solvent.

As with solvency, producing regular management accounts will also reveal if your business is managing to maintain profitability or if it is dipping into a loss making position.

Losses consume your hard-won assets and reserves, and if left unchecked, will push your business into insolvency.

We can help

Producing accurate management accounts each month will highlight your profitability and reveal if downward pressure on profits is going to be an issue for your business. We can help you set up systems to do this or process your accounting data for you. Either way, this is a task that should not be overlooked.

With this information we can help you create strategies to keep your business profitable or reduce the impact of any short-term losses you may need to finance.

Most of our business clients use cloud based accounting software to process and monitor their finances. Obviously, during the present coronavirus crisis, keeping an eye on the numbers is a no-brainer.

Trying to manage your business without the data that up-to-date accounting information provides, is rather like driving on a motorway with your eyes closed.

Most if not all software applications produce the usual profit statement and balance sheet. These will enable you to keep an eye on profits and solvency. However, during the present COVID disruption there are two other important areas that need your attention, cash-flow and a plan, a budget for at least the year ahead.

Many cloud applications facilitate a budgeting process. This includes producing reports that compare these budgets with actual results. Unfortunately, cash-flow reporting in most programs is limited. To produce meaningful, longer-term cash-flow reports will require that you link your accounts software to a specialist APP.

We can help

If you have not yet converted your bookkeeping to a cloud-based computerised process, now would be a good time to look at your options. We can help you choose.

If you have cloud-based software and need to identify or create reports to monitor your profitability and solvency we can help.

If you need to add a cash-flow reporting APP we can help you choose an appropriate solution.

In “normal” times, making optimum use of available tax reliefs and allowances and organising your business affairs to increase these benefits is why tax planning is such an effective tool.

The disruption created by the coronavirus outbreak has introduced such significant changes that tax planning needs to adapt, to provide specific strategies that will help you to exit from this period with your business interests intact.

For example:

• Make best use of any trading losses to recover tax already paid
• Working from home – claiming allowable costs
• Writing off redundant stock
• Claiming bad debts
• Revisiting VAT planning to see if you are using the most beneficial scheme
• Manging your income to avoid higher marginal rates of income tax
• Crystallising capital losses
• Avoiding tax on gifts

We can help

Call now so we can organise a fact-find session with you to see what opportunities there are to minimise your tax payments in the near future.

You may have noticed that businesses that have managed to maintain, and in some cases increase their sales, do so by having an online shopping presence.

If you sell goods or information, having an online platform to market from is now a no-brainer.

In most cases this will involve you adding a “shopping” area to your website. Unsurprisingly, there are a multitude of off-the-shelf options to consider.

We can help

If you need help creating a brief and a sensible budget for your website developer or if your present developer is unable to help, please call, we may be able to refer you.

If your business was closed down by the March lock-down process you may have no choice; you may need to wind-up your business now.

You may also have moth-balled your business, waiting for normality to resume so you can re-open at a later date.

Alternatively, your business may have benefitted.

Whatever your personal experience during these difficult times, sooner or later we will all need to consider our business exit strategy. COVID-19 has merely focussed our minds on this issue.

We can help

If you would like to start the ball rolling, call now so we can consider your business exit options. Without a doubt, a planned exit – where possible – is to be preferred to a forced exit.

The UK is facing mass redundancies once the current government Job Retention Scheme is eased back from July 2020. Currently, it is due to end 31 October 2020.

Add to this growing numbers of small business owners unable to continue in business and it is not difficult to imagine a growing number of motivated individuals that will be considering their options.

One of these options will be setting up a new business.

Based on our experience of supporting many new business ventures this is not a process that favours the unprepared.

We can help

If you are considering a new business venture please call so we can help you consider your options. There is much to consider.