In tough times it is important to be on top of your finances. Here are our top tips for things to look out for:
- Cashflow: make sure that you stay on top of your cash at all times. Work out how much money you are expecting in and when. Work out if there are any periods when cash is tight and arrange to cover it with a short term overdraft or loan.
- Bad debts: Don’t let late payments drift and become non-payments. Chase early.
- Review clients: now is a good time to review clients who are costing you money. Review your clients to ensure that they are all profitable. The Pareto Principle suggests that 80% of your profit comes from 20% of your clients. Downsizing your business might actually make you more profitable if you can trim a few overheads in the process.
- Employment matters: look at the staffing levels that you actually need for your current trading conditions, which roles you will need for a recovery and if there are any key staff that you need to retain for the future. If redundancies are necessary then take good legal advice and deliver any bad news both legally and kindly.
- Job support scheme: Assess which staff are worth paying to keep on just part time ready for recovery because they have skills that are hard to replace.
- Cash reserves: now is a good time to ensure that you have good cash reserves. How long can you cover your costs on your current cash?
- Long term contracts: in periods of uncertainty you may wish to avoid entering into long term contracts. For instance, you don’t want to be saddled with premises that are the wrong size and end up paying unnecessary costs.
- Deferred HMRC taxes: Start saving for deferred taxes such as VAT ( due March 2021) and Self-assessment Payments on Account (due January 2021) while you can. HMRC have also agreed time to pay arrangements . Bear in mind payment of the above will be due before you know it.
We can help you to make more specific plans for your own business and to keep track of the important numbers and cashflow so that you have up to date information for your business.