It's payback time

16th September 2020

I remember what it was like to have teenagers leaving the nest…

That moment when they first set out to go to university, and after 18 years of guidance, protection and lots of loving from their parents, they first had to make their own way in the world.

You hoped that you had given them the tools they need to find their feet…

And to succeed…

And watched them go with a mixture of pride and heartache.

It feels to me that many businesses are going through a similar process right now, post-lockdown…

…After months of support and help from the government, they’re slowly, shakily learning to find their independent feet again.

You see, during the “full” lockdown, the government was propping up our economy – and many companies – artificially…

…Paying staff’s salaries through the furlough scheme and giving companies enormous financial incentives to keep going when, left alone, they may have been forced to close or shrink substantially.

This arrangement may have felt comforting to many companies who benefitted, but it was only ever going to be temporary.

All that is gradually coming to an end now, as companies move back to a more normal environment.

The furlough scheme will be over by November, and whether they’re ready to or not, all companies are going to have to pick up the full cost of their payroll very soon.

Many may not be ready and this could put them into some difficulty.

At the same time, the government’s loan schemes are also coming to an end.

Most were deferrals, not grants, so for example, if you took advantage of HMRC permitting the delay of your VAT payment from the summer of 2020 to March 2021, that money is going to be due early next year. It’s payback time!

Those agreements will come back to bite many businesses, unless they’ve planned carefully where they’re going to find that money.

Then there’s the November budget – and Brexit. Both of these will very likely involve changes to companies’ tax arrangements, and could easily increase your tax burden.

Finally, there’s no question that as we emerge from lockdown (the ‘Rule of 6’ notwithstanding), we’re entering a very different marketplace, with vastly different trading conditions and consumer expectations.

Many companies are “winners” from these changes, but others are still trying to work out what it all means for them – because the situation is still so fluid.

What about your business?

As the government gently pushes companies to leave the nest, are you ready to stand on your own two feet?

Meeting all these financial obligations… Figuring out how many staff you can still afford to keep… and thriving in this fast-changing political and economic environment is not something you can play by ear.

You need to start planning for these changes now, working out all the possible scenarios you might face and how they might impact you financially.

The last thing you want is to suddenly face much higher payroll, or a much higher tax bill without any idea of how you’re going to pay for it.

I mean, can you imagine the stress when you realise that your expenses have just shot up – but your sales are completely static?

Or worse – when you realise that the government loan you took out now has to be repaid, but you have no idea whether your sales are going to go up or down next month?

As CEO, that’s a nightmare scenario, which will leave you feeling like the ground is shifting under your feet – and you’re completely out of control.

At Insight Associates, we never let you get to that point.

When we manage your finances, financial planning is a critical part of what we do for you.

Not only will we map out exactly what expenses you’ll have over the next few months, but we’ll play with different scenarios – like a massive tax rise or no-deal Brexit – to see how they might impact you, and if necessary, help you put financial plans in place to deal with them.

Whatever lies ahead, you’ll be prepared.

That kind of financial forecasting and planning is the marker of a company that has moved from adolescence to maturity.

That’s why well-run corporates take this process for granted. And if you want to grow more smoothly, and run your finances in the most professional way, you need to implement these processes too.

To find out more about how we can help you, drop me an email or call us today on 01279 647 447.



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