A view from the top | By Ged Cosgrove, group managing partner

The age-old saying, ‘fail to prepare and you prepare to fail’, has never been more relevant.

Though the economy is in a state of flux, many businesses feel that COVID-19 hasn’t impacted them too greatly… yet. The fact is that the reality of the pandemic and its impact on business is yet to fully bite. When there’s talk of a V or U-shaped economic recovery, and as multiple emergency support schemes draw to a close, cashflow projection, forecasting and business planning will become even more crucial to business survival.

Such was the breadth and extent of the Government’s financial support for businesses large and small, that many are simply being propped up by it. With the CBILS set to end in September, and the furlough programme planned to end in October, the likelihood is that we aren’t going to understand the true impact on cashflow issues until the end of this year, or perhaps the start of 2021.

While initially useful, schemes such as VAT deferral have allowed businesses to gather debts they wouldn’t normally have had. And those that were struggling financially before COVID-19 hit, are likely to be struggling even further after it. There’s a predicted surge in insolvency in the next six months and beyond – we’ve spoken to several insolvency practitioners who expect to see an influx of cases during Q1 of 2021 – so businesses must stay on top of debtor collection and start analysing cashflow forecasts, including any payments that they owe under any deferred payment schemes that have been arranged.

We’re encouraging businesses that can’t categorically say how the next six months might look for them financially, to consider taking advantage of the still-live CBILS payment. There are two months left to apply and receive payment, and doing so might be the difference between sinking or swimming.

Of course, there have been some positives to take from more recent Government announcements. Many of our clients are making use of the new flexible furlough scheme, which is helping sectors like manufacturing to continue meeting a surge in demand for their products. One thing that doesn’t quite add up for me, though, is the £1,000 bonus incentive for businesses that retain team members beyond furlough. Unless these members of staff are in extremely low paid roles, retaining them for another three months will prove more expensive than the income from the bonus – another reason for businesses to plot out their figures for the next few months, with very detailed scenario planning.

Meanwhile, the VAT rate cut for hospitality and tourism businesses will be a huge boost, enabling them to keep cash within their own four walls or choose to pass this onto the consumer as an incentive to drive footfall. It’s another complex change to accounting though, as certain products – including alcohol – remain at the standard rate. We’re working closely with clients who are already feeling unsure about how to accurately calculate this reduction and are available to support others in the same position.

There is a definite feeling of proactivity amongst our clients – many are understandably eager to get as close to normal operations as they can. That includes us at Champion, as we are undertaking a phased return of our staff into our network of regional offices. Our team are, as always, available to support you through this in a true partnership approach. Together, we will ride out this storm.