How SMEs Can Support Their Finance Department After a Pandemic
by James P. Outreach & PR ExecutiveCOVID-19 pandemic is taking its toll on both the lives and
livelihoods of the UK nation. For businesses, the challenge of regaining the
monetary losses suffered in recent months commences. This is particularly true
for SMEs.
Small to medium-size businesses account for 50 per cent of
total revenue that is generated by businesses in the UK. But one concern on
every business owner’s mind is how their finances can be supported during this
current climate.
With this in mind, we discuss a variety of different ways
that SMEs can support their finance department during these difficult to
predict times.
Consider the government-backed loans available
As of 17th March, the chancellor made a pledge to
all businesses that government-backed loans will be available to SMEs through
the British Business Park. Offering loans that support up to £5 million in
value, this is one of the lifelines that SMEs should look into. It could help
prevent negative cash flow results, or worse, forced business closure.
The overall purpose of this scheme is to provide access for
SMEs to loans or overdrafts when necessary. The government will give lenders 80
per cent for each loan that SMEs seek in order to support everyone through
these difficult times. Perhaps one of the main benefits to consider of this
temporary scheme is that no interest has to be paid within the first six months
of taking the loan out. Plus, no charges will be given to both businesses or
banks for this loan scheme.
Make some cost cuts
Supporting your business financially is not just about
finding new sources of money, but about how to save it too. Finding effective
ways to reduce your business costs could help offer some financial relief.
Some effective ways to cut your costs could include:
·
Assess your current portfolio of products and
services — Depending on the nature of your business, some products and
services may be performing better than others. For the ones that are only
accounting for small cash inflows, consider putting your suppliers on hold for
now to reduce costs.
·
Encourage workers to continue working from
home — Not only will this help decrease the chance of coronavirus spreading
between the workforce, but it will also help reduce the cost of utilities
including water and electricity bills that offices and workspaces require.
·
Search the market for cheaper suppliers —
For SMEs that are product-orientated, compare the price you’re currently paying
for suppliers and search around for cheaper substitutes.
·
Reduce heavy advertisement costs — Since
now the power of social media is arguably the most effective marketing tool to
use, TV and radio advertisements may be an unnecessary expense for now.
Instead, focus on creating a business presence online, using the likes of
Facebook, Twitter, and LinkedIn to do so – all of which are free tools.
·
Conduct an audit — To make sure that all
your accounting books, taxes, and cash flows are accurate and up to date,
conducting a small
business audit will help improve your chances of finding a lender if you
require further financial support.
Make use of the furlough scheme
The chancellor announced the coronavirus job retention
scheme, commonly referred to as the furlough scheme, has been extended until
November 2020. Despite initially only lasting till May, this extension will
help support not only SMEs, but the employers working within them too. Originally,
the government pledged to cover 80 per cent of all wages up to a maximum £2,500
per month. But as of 1st September, this cover will be decreased to
70 per cent with a cap at £2,187.50, and again to 60 per cent at a cap of
£1,875 per month as of October.
With more than 9 million employees furloughed over lockdown,
it's clear that this scheme is still highly valuable for SMEs. With this in
mind, if you are an SME struggling to cover overhead costs as the pandemic
continues, make use of the furlough scheme to help support both your business
and staff.
Keep up to date
Since the coronavirus pandemic took the world by storm, every
day is a learning curve for both the nation and government. With this said,
keep up to date with all the latest policies and schemes that are being introduced
to help support your SME in every way possible.
Of course, many determinants can affect how beneficial these
methods are when it comes to supporting SMEs. However, no business should feel
helpless. Finding financial support and relief throughout this time all depends
on knowing the right place to look.
Sources
https://www.bbc.co.uk/news/business-53748278
https://www.thesun.co.uk/money/11541429/furlough-scheme-end-uk-october/
https://www.thebalancesmb.com/how-to-cut-business-costs-2948320
https://www.lexology.com/library/detail.aspx?g=c5b6cc07-857e-4a26-b009-b5cf4ca5157b
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Created on Sep 28th 2020 05:19. Viewed 92 times.