Top 10 Tips for Managing Your Business Finances
We are in unprecedented times across the UK economy with Coronavirus impacting upon businesses and their cashflow.
The government have announced a range of significant measures to help businesses and their employees. Here are 10 top tips you may wish to consider managing your finances during these difficult times.
1. Keep up to date with what support is available to you as a business. The government announced a range of support measures last week and these can be found by accessing the links below.
Key things to note for Welcome To Yorkshire members are:
- £330bn of Government Backed Loans which will provide loans of up to £5m with the first 12 months being interest free.
- A 12-month business rates holiday for all retail, hospitality and leisure businesses in England.
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief.
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.
- For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
- Valued Added Tax (VAT) payments will be deferred for 3 months.
2. Be prepared and get ready. We are yet to fully understand the detail behind many of the proposals so get your paperwork in order to get to the front of the queue as HMRC, local LEPs and Bank’s are experiencing unprecedent inbound calls and queries. For example, if you are applying for finance under the interruption loan scheme you will need 2 years integrated projections (balance sheet / cashflow / profit and loss account).
3. Keep on top of cashflow. Look at your daily and monthly rolling cash flow forecast, keeping it up to date all the time to understand your cash availability.
4. Preserve your cash. Be on the front foot and speak to your debtors to understand when payments will be made and if there are any problems. At the same time try to stretch your creditor payments to keep cash in your bank account.
5. Early dialogue with Banks is key as they don’t like surprises. If you have a problem, then be proactive with your funder and tell them as they will work with you to support your business. Your bank may give you a capital repayment holiday thus giving you additional working capital.
6. Consider using a finance broker. With Bank’s reducing relationship managers over the last decade, you may spend a long time holding to speak to somebody in a call centre. Finance brokers have replaced bank managers and they can access the whole lending market to find you the best deal. They also can fast track your application as they work with dedicated broker teams within the Banks. Check the broker is FCA & NACFB registered.
7. Contact HMRC to see what help they can provide. Whilst the initiatives launched are a significant help, they might be able to do more to help you.
8. Check your insurances. Do you have business interruption insurance you can claim on OR bad debt protection? The government have said businesses directly affected will be eligible to claim on their policies.
9. Be open and honest with everybody. Explain what you and your business are doing to manage your current challenges including your suppliers, employees and other key relationships.
10. Talk to your accountant and solicitor. You pay them to provide an expert advice so leverage your relationships. A problem shared is a problem halved.
This article has been written by Paul Grace who is a Non-Executive Director of Welcome to Yorkshire and Director of RedSky Corporate Services Limited.
RedSky are a business finance brokerage who are FCA and NACFB registered. They have access to over 140 funders and work with SME business across the North of England.
Contact Paul on 07854 119 277 or [email protected] if you want a discussion on your business finances and the support that is out there to help you.