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The Small Business Economic Crisis Financial Management Plan

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Cashflow

Reduce cash out

• Cancel expenses that have little or no business benefit (subscriptions/entertainment)
• Cancel expenses that have little or no personal benefit (reduce your personal income need)
• Renegotiate terms with required recurring and one off expenses (rent, HP)
• Seek terms/extensions from suppliers
• Make time to Pay arrangements for outstanding tax 
• Defer VAT until March 2021
• Defer Income tax 2^nd instalment until 31 January 2021

Increase Cash In

• Proactively address cashflow forecasts to identify pinch points so they can be managed
• Consider all possible payment options from debtors. (Financing, credit card, gocardless, cash discounts etc.,)
• Use the “what can you afford?” strategy with high risk clients.
• Prioritise your family income needs over your business income needs. (for the moment)

Debt Management

Debt Control

• Don’t take on new debt to maintain “business as usual”
• Use extreme caution if borrowing to make high probability returns
• Use extreme caution with borrowing to bridge short term cash flow dips
• Renegotiate debt for better terms, (interest, instalment frequency, length of loan)

Debt Planning

• Consolidate and refinance debt
• Check your personal financial credit rating and improve if possible
• Avoid credit card debt (avg. APR 17.3%) 

Strategic Planning

Maintenance

• Schedule regular financial debrief with financial/profit advisor
• Evaluate offering mix where possible, focus on high margin products/services (reduce/remove low margin)
• Evaluate client mix, focus on historically well paying clients
• Enhance communication rhythm with clients, more frequent and shorter.

Growth

• Use downtime to plan future strategies
• Plan & create marketing campaign for after lockdown
• Market to potential customers leaving your competitors
• Enact “bold” moves- amplify marketing, focus on increasing profits

Accounting

Proactive

• Set up new general ledger accounts for unique circumstances (eases reimbursements & recasting)
• Evaluate stock turn, tighten turn on moving product, eliminate non moving stock.
• Review accounting system- collection of automated invoicing.   (Frequency)

Future Planning

• Conduct comparative analysis of prior years, months (distinguish cause and effect)
• Evaluate client history to proactively determine where you can make terms concessions.

Tax

Proactive

• Ensure all allowances and reliefs are claimed (capital allowances, R&D, EIS etc.)
• Contact HMRC to arrange time to pay for any outstanding debt, ask for interest waiver.
• Open a separate “tax account” with your bank
• Treat Income payments on account as due on 31 July, pay to the separate “taxes” bank account
• Treat VAT due before 30 June as due but pay to the “tax account”