Business owners faced with difficult decisions as the end of the furlough scheme looms must not panic – it is not too late to get help and find ways to improve cash flow. Despite pressure on Chancellor Rishi Sunak to extend the job-saving scheme in line with continuing restrictions, he has made it clear that furlough will end as planned.
I have huge sympathy for business owners who are dreading the end of the Government’s lifeline to workers. But it’s not too late to get help, and that there are steps that businesses can still take to protect staff and improve cash flow as the support ends.
Some business owners may feel that the end of furlough is an unavoidable cliff edge, and they may be concerned about what’s going to happen. My first advice is always to plan and forecast. It might be difficult to forecast in a market where you cannot predict if there will be a sale tomorrow, but you can, to an extent, take a stab at it by ascertaining when the peaks and troughs happen, where the risks are and what the timings are to plan around them.
It can feel difficult to take a step back and plan carefully when you feel you’re up against it, which is why I’d urge business owners not to panic and to seek outside help if they can.
There are several things that can be done to resolve cashflow shortages. If businesses have not already explored their ability to borrow, there is still a timeframe to secure more funds. This may not be advisable for every business, but if owners believe the business will recover then it is an option.
Owners can look at reducing their personal requirements whilst the business’ income is at lower levels. In my experience owners are happy to do this because they take pride in their business and team, and their priority is seeing them thrive into the future.
It is also worth thinking about suppliers as a funding source and reach arrangements around new payment terms that take the pressure off. Typically, the businesses I work with have used furlough in place of redundancies, in the hope that economic recovery will bring people back to full employment. They have tried very hard to avoid redundancy and use it as an absolute last measure, rather than a first.
Accountants are not just there to offer financial advice. With experience in guiding business leaders through struggles and to achieve growth, they offer an arm around the shoulder of the people they work with.