The challenge for business has never been sterner than it is now, with the risks associated with the relaxation of the Covid-19 restrictions (and the various support packages that went with it) and Brexit (the full effect of which having been masked by the pandemic).
It has never been more critical to insulate your business against the risks and as such, we set out some simple tips to bear in mind. The key is to be ahead of the game – proactive, not reactive:
- Cashflow management – the government assistance schemes such as furlough, CBILs and Bounce Back loans will come to an end. It’s essential that you prepare your future cashflow and understand where your cashflow problems may arise. Manage cashflow collection and shorten payment terms. Preparation gives you a chance to manage the issues.
- Any cashflow projection/number crunching should be for at least a 13-week period – i.e. to include at least one VAT quarter.
- Change management – look at trading history, forecast future trading strength and weakness, and recognise which areas of your business need to change. Are staff levels correct? Can production savings be made? Do you need to change your focus? Make decisions for the good of the whole business.
- Contract management – ensure your terms and conditions are up to date and appropriate for Brexit. Revisit terms with suppliers – they need your business. Understand your customers’ needs.
- Information management – are you using market intelligence? What are your competitors doing and how are they coping? This market will provide opportunities to acquire, or merge with, other businesses. Communicate with customers, suppliers and competitors – knowledge is invaluable.
- Duty management – directors have duties and the focus of those duties changes as the financial fortunes of a business change. Consider your duties and seek professional advice. Minute your decisions and the reasoning for those decisions. Keep proper books and records.
- Stay alert to the withdrawal of the temporary suspension of certain provisions, all brought in as a consequence of the pandemic and which will be removed over time. These include the service and presentation of statutory demands and winding-up petitions; forfeiture of leases for non-payment of rent; filing requirements at Companies House and ipso facto clauses which prevent certain suppliers of goods and services from withdrawing these where the client enters a formal insolvency process.
Unless your business has been successful throughout the last 12 months, it could suffer in the next 12 months if you do none of the above.
Now is not the time to stand still – now is the time to grasp the nettle and prepare your business for a healthy future.