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Kara Accountants Update 24th March – Stay At Home

Kara Accountants update 24th March – Stay at Home

Following yesterday’s instruction to stay at home unless completely necessary all staff except myself are now home based. I will be partly in the office as necessary and also working from home.

Our systems seem to be working as planned. The phones aren’t as seamless as normal but you will be able to get hold of us if you need to. In terms of communication if you call and your query cant be dealt with immediately we are aiming for someone to return your call the next business day at the latest but I would suggest using emails wherever possible.

We are doing our best to continue as normal but the physical transfer of paperwork is obviously a problem when contact is to be avoided. To that end if you need to get documents to us that wont fit in our letterbox outside (and are comfortable doing so) Mike at the village shop and post office which remains open has kindly agreed to take your boxed or enveloped paperwork and pass it on to us at the earliest opportunity.

We still have limited information of any assistance which is being made available to self employed workers and sole traders. I know that it is a concern to many of you but as soon as anything is announced we will share it with you as a priority.

In the meantime please find below some Survival Tips which are relevant to all businesses in challenging times.

The overriding assumption is that the profit motive is temporarily replaced by business survival.

  • Send invoices for all work completed immediately
  • Invoice for work in progress immediately
  • Consider scaling back on non-essential expenditure e.g.:
    • Sponsorship
    • Old subscriptions that you never got around to cancelling
    • Non-essential equipment or vehicles on hire
    • Outsourced services which you can provide yourself
    • Services that can be obtained for free elsewhere e.g. helplines that can be replaced by a good internet search or may be available through an existing trade body membership or insurer
    • Review insurance cover and reduce non-essential elements e.g. breakdown cover if you are working from home
    • If you have pre-payment cards, legal services retainers, consultant retainers or suppliers with minimum order quantities ensure that these are still in-line with your requirements and negotiate reductions as necessary
  • Contact suppliers to negotiate discounts
    • Be considerate and sensitive to the fact that most of your actions to reduce costs will have an impact on other businesses
  • Calculate your revised breakeven point and monitor daily cashflow against this benchmark
  • Calculate how long your reserves will last if your income falls to a minimum
  • Understand individual customers and reassess credit risk and individual requirements
    • Consider asking for up-front payment or payments on account to improve cashflow and reduce credit risk
    • Ask customers to order and pay for materials directly with suppliers
  • If you have employees communicate and reassure them as far as possible. Take advantage of all the financial support available from the government. Understand your obligations on sick pay and set yourself up to receive Government payments of 80% of employees monthly salaries up to £2500 per employee per month, for any employees you need to make furloughed. This is unprecedented and stops employers having to make anyone redundant.
  • Use staff time wisely and become self-sufficient by insourcing as much as possible to reduce cost e.g. deliveries, cleaning and maintenance
  • Engineer cost savings into the products and services that you provide to reduce prices
  • Offer a basic variant of your product or service that meets basic needs at a reduced cost and selling price
  • Reduce the range of products and services to minimise complexity and save time and cost
  • Focus on what you are good at and consider collaborations with other businesses to take advantage of synergies
  • If you have surplus capacity that you cannot cancel e.g. owned yard/warehouse space or equipment offer it for hire to other businesses that may be struggling to pay for what they are currently using
  • Contact suppliers to secure deliveries and search for alternatives if necessary. Some suppliers may not survive or may be struggling to meet changes in demand
  • Do not over-order on supplies and where possible order little and often instead of bulk buying
  • If you have excess stock now is the time to run it down or sell off slow moving items at a discount
  • Monitor competitors and ensure your prices are still comparable
  • Be realistic about pricing and if you can afford to offer targeted discounts to help customers in need do so but not at a loss
  • Make sure you respond to customers concerns, communicate with them and reassure.
  • Devise policies and procedures that keep you, your staff and your customers safe and publish them to reassure and attract customers
  • Consider adapting your products and services to meet new demands created by the current situation. E.g. village pubs are offering grocery and meal deliveries to their communities
  • Can you change the way you provide your products or services to accommodate new social distancing advice e.g. via the telephone and internet?
  • Offer free support for example, factsheets, FAQs, links to government websites
  • Contact credit card companies and other loan providers to negotiate

Reduced interest rates (base rate has been slashed to 0.1%)
Payment holidays or reduced payments without penalty

  • Contact HMRC to negotiate extended payment terms over and above what has already been announced for for VAT, PAYE, Corporation Tax and Self-Assessment Income tax
    • If you pay tax through self-assessment calculate your tax liabilities for the last tax year before your next payment on account is due in July so that you can submit your return or apply to reduce it if applicable. The next payment in July 2020 has been deferred until January 2021
  • Local authorities will contact you automatically if you are exempt from business rates for the next 12 months
  • Local authorities will contact you automatically if you qualify for a small business grant

Review support available from the British Business Bank https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
Review support available from the government https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

Kind Regards

Jody

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