Coronavirus: planning for beyond the lockdown

It would appear from the daily briefings that we are either at the peak of the current curve or slowly beginning the descent from the peak. The government’s briefing on 22 April was sobering, as it gave a clear steer that some form of social distancing is likely to be required for at least the rest of 2020 and possibly into 2021.

The current furlough scheme and other assistance being provided by the government are allowing most businesses to hold their current position, but the real challenge will be when the relaxation comes. In our view, businesses need to be planning for this now, as decisions will need to be made before the lockdown ends in many cases.

How to plan ahead

Management teams should be creating a financial model/cash flow forecast based on how they think their business will perform coming out of lockdown. Currently, we don’t know how the current lockdown will be relaxed and when measures will come into effect, but it’s still possible to prepare a base model that can be flexed easily when the precise details are known.

In order to do this, businesses will need to consider the following points:

1. Financial forecasting - on reopening, how quickly is your turnover likely to recover? This will depend on a multiple of factors, such as the impact of consumer confidence and ongoing social distancing, and where you are in the supply chain.

2. Staff – unfortunately, for many businesses the restart is likely to be slow and you may not need as many staff as you had prior to Covid-19. Owners will need to strike a careful balance between achieving operational efficiency and maintaining standards/service levels. As part of this review, you’ll need to factor in redundancy/notice costs. Also, consider making these staffing decisions during the furlough period, where possible, to lessen the financial impact on the business.

3. Finance – using your forecast, you should be able to calculate the cash needs of the business for the remainder of 2020 and consider what finance is required. In our view, this is where the new government backed loans may prove very valuable. Although some loan applications are being turned around quickly (four days is our current client record), many are taking weeks and are then failing, so we recommend that you start planning ahead now. Furthermore, it’s crucial to keep your financial affairs up to date throughout the lockdown to avoid delays with any future loan applications.

4. Innovation - is it possible to adapt the way your business operates to better serve your customers/clients throughout the lockdown and beyond? This could include updating your website, moving to online sales, changing delivery options or improving IT for staff working remotely. If some form of social distancing becomes the ‘new normal’ (as seems increasingly likely), businesses should be implementing such changes as soon as possible.

How we can help

Cash flow projections and planning have never been as important as now. The businesses that survive the lockdown will have a clear understanding of their needs and be able to model any changes that result from social distancing policies quickly. These forecasts will also be requested by banks in relation to any future finance applications. We have expertise in this area and can help you prepare these figures, along with any other financial information that’s needed.

Our team also specialise in Cloud Accounting and work with many online apps/tools that give you a clearer picture of your finances and automate key tasks; be this day-to-day cash flow tools, or invoice automation to remove manual entry. Now is the time to review your IT efficiencies and we can assist you with this to ensure you stay on top of your numbers when it matters most.

If you would like advice on any of the issues raised, or for help with services like bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580 or email info@richardsonswift.co.uk.