🆘 Your CV19 Survival Guide for April 🆘

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🆘  CV19 APRIL SURVIVAL GUIDE  🆘

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Hi ,

If your business has been severely affected by CV19, this email will hopefully serve as your guide for the next four weeks.

For all the talk of help from the govt, we’re not expecting the first cash grants for eligible businesses until late April. For furloughed workers, it’ll be May, and June for the self-employed. So for now, you’re on your own. With us, of course. 🤝

So let’s look at some simple things for THIS COMING MONTH to stretch your reserves as far as possible. The critical actions you need to take can be split into FOUR distinct categories. These are listed below in a very specific order - the low hanging fruit is first:

 

1) Get Your Money In

2) Reduce Your Expenses

3) Defer Your Payments

4) Get a Loan

 

(We assume you’re using accounting software in your business to understand your assets and liabilities and when they are due. If not, er...what the flip?? 🙊 We'll see if we can cobble something together for you but it isn’t going to be pretty.) 

 

Get Your Money In! 💰

This sounds obvious but it’s often overlooked. We’re talking here about getting customers to pay you the cash you're already owed. Even if you have zero work this week, you should be doing two things NOW:

Review your ledgers

If you’re owed money from outstanding invoices - CALL THEM NOW. Forget emails. Even if invoices aren’t overdue, get on the phone and explain your back is against the wall and can they possibly pay earlier than normal. Even a part payment with the balance to follow.

It’s not a sure-fire plan - your customers may be in the same boat as you. Indeed, they may not survive this so now may be your only chance to get that cash.

Check your diary

Are you cr*p at sending out invoices in the first place? Have you billed for every single piece of work you’ve done recently? Go through your workplan/diary/emails etc NOW to identify any work done which you haven’t yet invoiced for.

I’ve had a few tradesmen do some work for me in March, and TWO have yet to invoice me. You can’t chase invoices if you haven’t even billed for the work!

If you’ve already encouraged/coerced/thumb-screwed your customers and the tank is still running dry, read on...

 

Reduce or Remove Expenses 🛑

If you aren’t doing this at least annually, now is the time to review what you’re spending with suppliers and in your personal life. Run a P&L report from your accounting software and start with the biggest expense categories. We can show you how to do this.

Check your key suppliers are still good value. Don't necessarily go for the cheapest options, but negotiate short-term price reductions if you can. This will be industry-dependent; cleaning suppliers probably aren't up for haggling!

Look at software you rarely use, or can ditch in the short term. Speak to any suppliers where the cost is based on expected turnover - insurance is a key one here.

Review your direct debits and standing orders; do you really need that gym membership? Spotify Premium? Can you do without the wine club and pause charity donations?

It goes without saying that if salaries are your biggest cost, you MUST consider furloughing, terminating or at least reducing the hours of your team. I know it’s a hard decision but hopefully they will understand. Remember the govt grant for furloughed staff could protect a good chunk of their wages - see our last email for more details of this.

  

Defer Your Payments ⏲

If you can’t reduce your outgoings, then the next best step is to defer them.

First off, what payments are due to HMRC this month? Your March PAYE bill is due by 22nd April. Call HMRC ahead of this date to agree payment terms. Don’t leave it to the due date; you’ll get automatic penalties if you miss it.

VAT payments due between now and 30th June are automatically deferred BUT if you have a direct debit in place, HMRC have confirmed they WILL still take the cash. So you’ll need to cancel the DD well in advance.

Next, call your lenders - business and personal. We are hearing clients obtain 3 month mortgage holidays with just a phone call, and commercial lenders also seem relaxed right now.

If you’re in rented accommodation, speak to your landlord. They can’t take steps to evict you until after 30th June in any case, but let's not think about that; try to arrange a payment plan with them. And remind them the 3-month mortgage holiday applies to buy-to-let properties too, in case their accountant hasn't mentioned this 😉

Then, run off a supplier ledger from your software. Who are your biggest creditors? CALL THEM and see if you can arrange a payment plan. If you aren’t going to be ordering more stock for a while, having your account on stop isn’t such a big deal.

 

It's Debt, Jim, But Not As We Know It! 🏦

A combination of low interest rates and government-backed fee-free lending may be the right thing to keep your wheels turning if you’ve already tried EVERYTHING above.

If you don’t expect any uptick in income for the next few months then surviving April alone won’t be enough. Don’t be afraid to consider a loan to keep you going for longer.

The new Business Interruption Loan provides a loan of up to 6 years, with no upfront fees, no capital payments for 6 months, and no interest payments for a year. Even if you’re not eligible for this (not everyone will be) the BoE base rate is the lowest it’s ever been; just 0.1%.

If you're a Limited Company, it's important to realise that you can't dip into this for personal spending, so give me a call if you want to chat about personal vs business loans.


There's a LOT of misinformation out there... 😕

It's always nice to be the source of 'breaking news'. Like, for example, whether directors can furlough themselves [possibly, we're waiting for confirmation]. I've lost count of the number of people who've told me "Martin Lewis said on Twitter that you can".

Yes, he did. Then later the same day he spoke to another source who said you can't. His latest stance is 'yes' but purely based on a phone call he's had.

The upshot is, we don't rush to get you information unless it's come from the top in writing. Otherwise, you could be banking on something which will never come.

Remember Martin Lewis isn't responsible for your taxes. You are. And if you have an enquiry from HMRC, I don't think a link to his Twitter account is going to cut it 😜

 

My Final Thought

This lockdown is killing your business right now. It's brutal. I want to do everything I can to help you. That's why we have effectively written off the rest of April to help as many people as we can to get through this first hurdle. Make no mistake, this is only the beginning.

It's tempting to get out there and try and earn whatever income you possibly can. We all have bills to pay and kids to feed. But Coronavirus is deadly, it is killing people right now. On Saturday, our hospital in Taunton reported the death of three people from CV19.

We need to listen to government advice (there will be lots of time for Boris-bashing later, if that's your thing) and do everything we can to 'flatten the curve'. The incubation period is between 5 and 14 days - so even if you feel fine, you could still be a carrier and develop symptoms this week!

And remember you can click here to see the archive of previous CV19 emails, in case you've just joined us, or use the red banner at the top of www.blue-penguin.co.uk to book a free of charge CV19 support call with me.

In the meantime, stay safe, stay tuned and for goodness' sake stay indoors if at all possible.

 

Peter and the Blue Penguin team. 💙

Smallprint: this is a massively fluid situation. The above is our understanding right now, but things are changing daily. Please don't take any of this as legal advice, yada yada. We'll do our best to keep you up to date with more information as we get it. Please call us for clarification on any points above.

 

Blue Penguin Chartered Accountants • 16 Claremont Drive, Taunton TA1 4JF

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