Top tips for managing your finances through the COVID-19 crisis

covid-19 finance blog

Understand your cashflow

This is VITAL, you need to understand how much “runway” you have before your business is likely to run out of funds. If you haven’t already, we suggest setting up a spreadsheet, as simple or as complicated as you want:

  1. Start with your bank balance today 
  2. List chronologically all your expected cash RECEIPTS 
  3. List chronologically all your expected cash PAYMENTS  

Remember this is a cashflow so only include actual expected cashflows (i.e. not sales with long terms or debts you only need to pay later). 

We suggest starting with just the next three months. The duration of this crisis is anyone’s guess, but anything less than three months cash in the bank (or available via overdraft or loan facility) is a cause for concern.   

Needless to say, the bigger the buffer you have the better. Once you have this list you should work through it line by line to see how you can improve that buffer.  

This should be a live and working calculation, updated as new information becomes available (much of the detail and timing of the government announced initiatives is unknown at this stage).    

Manage your payroll costs

This is a major expense for all, the HR implications of the crisis are expertly covered by our HR consultant, Naomi, in our HR FAQs.

For your cashflow calculations you need to assume that all payroll costs are to be paid as per normal. The government has set up a new portal for claims which is now up and running. Approved claims will be reimbursed by HMRC via BACS payment. After submitting your claim it is estimated that you should receive funds within 6 days. 

Remember from 6 April 2020 if your National Insurance contributions last year were under £100,000 your business qualifies for £4,000 Employment Allowance Relief. The allowance will reduce your business’s Class 1 National Insurance each time you run your payroll until the £4,000 has gone or the tax year ends (whichever is sooner). 

Rent reductions, holidays and deferred payments

If you rent directly, talk to your landlord to ask them about a rent reduction or holiday. They are more likely to make an arrangement with you than try and find a new tenant in this current climate. The same applies if you rent a serviced office, talk to the service provider. It may be that they can take advantage of the business rate reductions (see details below) and pass them on to you.  

Chase debtors for payment

Start with a friendly phone call, remember their business will most probably be in crisis mode too. If they can’t pay you everything, try and work out some terms with them.  

If collecting these funds are crucial for your business survival and your debtor is unwilling to help then it’s worth considering the measures highlighted in our article on avoiding late payments and collecting bad debt.

Deferred VAT payments

VAT payments can be deferred:  

  • If your VAT payment is due between 20 March 2020 and 30 June 2020 you have the option to defer your payment for up to a year 
  • You will still need to submit your VAT returns on time 
  • You do not need to tell HMRC that you are deferring your VAT payment 
  • Remember to stop your direct debit  
  • Deferred VAT payments must be made on or before 31 March 2021 
  • HMRC will continue to process VAT reclaims and refunds as per normal 

Other HMRC taxes

If you have missed a tax payment or you might miss the next one contact HMRC through the Time to Pay Service. They have a dedicated helpline (0800 024 1222) and will consider deferrals on a case by case basis.  

Coronavirus Business Interruption Loan Scheme (CBILS)

When first announced the CBILS seemed like a broadly applicable solution to help businesses (with less than £45m turnover) get through the crisis. Even puts the scheme forward as a source of short-term funding whilst companies wait for SSP and Furlough refunds. Despite the scheme promising loans up to £5m, with 12 months interest paid and 80% of the loan guaranteed by the government, the banks have been slow at getting funds to businesses. Only a small percentage of businesses who have enquired about CBILS have secured a loan. Following a public outcry on the lack of accessibility to these loans, the government has put pressure on banks to ease their lending requirements and process applications. UK Finance announced on 15th April that £1.1bn has now been lent to 6020 businesses, which is an increase of £700m in the last week.

It is certainly worthwhile checking in with your bank to see what their CBILS requirements are. The number of CBILS accredited lenders has been increased to over 40 and can be found on the British Business Bank website.

Business rates and Small Business Grants

The Government has made a series of announcements about the support available to businesses in response to the coronavirus pandemic: 

  • All businesses in the retail, leisure and hospitality sectors (including pubs), and all providers on Ofsted’s Early Years Register will pay no business rates in 2020/21 
  • Businesses classed as within retail, leisure and hospitality sectors (including pubs) with a rateable value of over £15,000 and up to £51,000 will be eligible to apply for a £25,000 grant in 2020/21 in addition to their relief from business rates 
  • Businesses who receive small business rates relief will be eligible to apply for a £10,000 grant in 2020/21 on top of their existing relief 

There is no need to contact your council, who will automatically reduce the amount of business rates you have been asked to pay. You can find expanded information in the Retail Discount Guidance.

Help for start-ups

The Chancellor announced on 19 April that the government will support the UK’s most innovative start-ups as part of a £1.25bn bailout for venture capital-backed businesses struggling to survive the lockdown. There will be a £500m Future Fund, a co-investment fund for high-growth companies in the form of a convertible loan structure, matched by private equity, whereby the government takes a stake in the company at a discount until the debt is repaid. There will also be £750m made available as grants and loans through Innovate UK to smaller businesses focussed on research and development.

Merton – claiming business rates relief and small business grants 

Merton Council expects to receive the funding from central Government on 1 April 2020. They will be writing to eligible businesses by 15 April with details of the reduced rates and grants. If you have not heard from the council by 15 April, then you will be able to download an application from their website. 

Here is a link to Merton council’s website:

Kingston-upon-Thames – claiming business rates relief and small business grants 

Kingston Council states: Business Rate accounts that have been identified as being entitled to this relief, will not have a direct debit collected in April. There is no action required from you to ensure you receive the new rate relief, if your business is eligible.

Small business grants will become available as soon as possible. Businesses that qualify for the grants will receive an email or letter from the council’s Business Rates Team to make an application online.

Here is a link to Kingston council’s website:

Richmond-upon-Thames – claiming business rates relief and small business grants 

Richmond Council has identified all of the businesses that would have been eligible for any of these reliefs on 11 March 2020 and have written to them at their business rates correspondence address inviting them to provide specific information in order to apply for the relevant grant. 

Here is a link to Richmond council’s website:

Wandsworth – claiming business rates relief and small business grants 

Wandsworth Council has identified all of the businesses that would have been eligible for any of these reliefs on 11 March 2020 and have written to them at their business rates correspondence address inviting them to provide specific information in order to apply for the relevant grant. They can either respond to the letter or fill out an online form.

Here is a link to Wandsworth council’s website:

Commercial business insurance

Your commercial insurance policies probably won’t cover pandemics such as COVID-19. But it is worth checking if it directly covers government ordered closure. 

It’s certainly worth the time to check the terms and conditions of your specific policy and contact your provider. 

Find out if you are entitled to support

To find out if you and/or your business are entitled to any of the government’s coronavirus business support, try the finder tool which has a questionnaire leading to information as to whether a business is entitled to support from the following schemes:

  • Coronavirus Job Retention Scheme
  • Deferring Self Assessment payments on account
  • Statutory Sick Pay rebate
  • Self-employment Income Support Scheme
  • Business rates holiday for retail, hospitality and leisure
  • Retail, Hospitality and Leisure Grant Fund
  • Small Business Grant Funding
  • Coronavirus Business Interruption Loan Scheme
  • Support for businesses paying tax: Time To Pay Service

If you are one of the businesses or individuals who feels like they have fallen through the gaps in the government’s support then please contact the FSB at who are lobbying government on behalf of SMEs.

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