Here is a checklist of practical steps you can take to protect your cashflow and the main government measures put in place to support firms through the current COVID-19 shutdown.
- Micromanage by drilling down into your cashflow to a daily level. Make sure you know what your expected income and cash burn for each day is. This will prevent any unexpected liabilities from cropping up further down the line.
- Ensure fee earners are fully up to date with their billings.
- WIP – review your Work in Progress and see what can be billed now and in the short-term. What is required to complete any on-going projects/orders? Is there any reason why you cannot fulfil them? Communicate with your clients.
- Direct work to areas where you are satisfied the time spent will generate a recovery from fees within the next three months.
- Identify what debts can be recovered during this time and consider offering a discount for early settlement.
- Identify what payment holidays or spreading options are available and take advantage of these. Remember to cancel your direct debits or standing orders where appropriate
- PII Financing - firms who have financing arrangements in place with Close Brothers for professional indemnity insurance and/or practising certificates can get in touch with Close Brother's customer service team to discuss options for waiving fees, temporary reduction in repayments or a repayment holiday.
- Speak to your bank/lenders/hire purchase creditors and see if they are willing give you a payment holiday or repayment reduction for the next few months.
- Liaise with your landlord and see if you can have a payment holiday or split the next quarter up over a longer period (i.e monthly payments rather than all at once). If you have arrears, then incorporate these into your cashflow and offer to pay something if you can. If you are unsure about breaching the terms of your lease then always seek independent legal advice.
- Review partners drawings policy and consider restricting these at this time.
- Consider cutting other non-essential items of expenditure, including reviewing how any firm credit cards are being used. Sort your liabilities/recurring expenses by amount, frequency and whether they are critical. Where possible stop any expenditure that is not vital.
- Communication is key – the sooner you engage, the sooner a solution can be found.
Our accountancy partner AAB have done more work in this area and have outlined the key areas businesses should focus on.