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Getting back on track: prepare, plan and take action

by The Business Influencer

By Johnathan Dudley, Midlands Managing Partner and Head of Manufacturing at national audit, tax, advisory and risk firm Crowe

 

Managing your way out of a crisis means adapting quickly to new challenges and opportunities.

Returning to work is not simply a matter of switching the lights back on. COVID-19 has caused many businesses to fundamentally change their working practices, restrict some activities and, in some cases, temporarily close down.

Some of these changes will need to be absorbed permanently and your business model rewritten if you are to move forward successfully.

 

“There are three key stages you can follow to help chart your course…”

1.Stabilisation – this encompasses all the actions you need to address effectively the short term needs of your business during lockdown and beyond. Furloughing, cost management and funding for short to medium term business interruption.

 

2.Health check – what will the ‘new normal’ be for your business in the future? How will you plan and implement your return to work? What do you need to change to make work safe and viable?

Have you considered what short and medium term opportunities exist, and how you are going to exploit them?

What do you need to change in your ways of working in the medium to longer term?

Have you considered, and drawn up, an interim operating model?

 

3.Functioning successfully – having undertaken the risk management phase of your business, and changed customer, supplier, production and workforce relationships and practices to fit the ‘new normal’, you will also need to build in resilience in case lockdown is reintroduced.

 

Throughout these stages, you will need to build up an understanding of the assistance that is available and how it can fit into your evolving new business model.

At Crowe, when lockdown was announced, we recognised that our clients would need support in a way, and on a scale, never envisaged before – and we got to work straight away.

One way of focusing all our thoughts was to produce a funding flowchart that is updated regularly and available with all the latest information in real time.

This has been our most important tool in helping guide our clients through the maze of announcements, funding, grants, loans, reliefs, deferrals and other unprecedented assistance that Chancellor Rishi Sunak brought forward, to help mitigate the devastating economic impact of coronavirus.

It is important to note that all these schemes are subject to change and therefore you are strongly advised to discuss with your regular Crowe contact how best to make use of the assistance available, and more importantly, how it fits into your overall business and recovery strategy as we move forward.

The Coronavirus Business Interruption Loan Scheme (CBILS) was introduced to help SMEs with up to £5 million available in the form of term loans, overdrafts, invoice finance and asset finance,  on repayment terms of up to six years.

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) is for businesses with turnover more than £45 million. For businesses turning over up to £250 million, funding is available up to £25 million. Funding of up to £50 million is available for businesses turning over £250 million.

 

“For smaller businesses, the Bounce Back Loan Scheme (BBLS) providing up to £50,000 of funding is available.”

 

A lot of focus has been on the Coronavirus Job Retention Scheme (CJRS) and its role in preventing mass redundancies. Employers can apply for a grant to cover up to 80% of an employee’s salary, up to £2,500 a month, if they are part of a PAYE scheme, not working, but furloughed and kept on the payroll.

Sector-specific assistance includes 12 months business rates relief for all hospitality, retail and leisure businesses in England, plus an expanded retail discount.

Further grant funding includes £25,000 for retail, hospitality and leisure businesses with a rateable value between £15,000 and £51,000, and a £10,000 grant for any business that qualifies for Small Business Rates Relief.

Other measures may not help with profit and loss, or avoiding redundancies, but they can help ease cashflow worries in the coming months.

They include the ability to defer VAT payments and some taxes, but arrangements must be made and agreed with HMRC. You should record and retain all communications with HMRC to avoid misunderstandings at a later date.

The Chancellor, in announcing his first raft of economic support measures, said he would not hesitate to augment this package if he thought further help would be necessary and beneficial.

In his July statement, the Chancellor announced a bonus to be paid to businesses of £1,000 for each furloughed employee still employed in January 2021. The grant applies to everyone who has been furloughed since the beginning of lockdown measures, provided they have earned a minimum of £520 per month between the end of the job retention scheme and the end of January 2021.

There is little doubt there will be further announcements made and the challenge for businesses is how they transition from furloughing back into full employment. Judgements will need to be made not just on numbers of staff required, but on the physical space to house them, now that so many have grown used to working productively from home.

It is essential that business owners have all the facts and figures at their fingertips if they are to plan their way to get back on track.

At Crowe, we have been working tirelessly to support our clients, helping them to make smart decisions which will create value for their business in the future.

You can find out more via Getting your business back on a new and safe track and we have also been considering What can businesses learn from COVID 19 to come back stronger, and last, and certainly not least, there are always tax implications for each and every decision made.

Our Getting back on track: tax considerations can help you to consider the actions you need to take using three stages stabilisation, health check and functioning successfully.

 

Johnathan Dudley chairs Crowe’s regular Manufacturing Business Network, which is currently meeting via regular video calls. He also leads on Crowe’s annual Manufacturing Outlook Report and is Chair of the ICAEW Manufacturing Community.

 

He can be contacted on johnathan.dudley@crowe.co.uk or by calling 0121 543 1900.

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