Simon Shaw of Duncan & Toplis, Newark: After a challenging year, it's time to plan for the future
As we pass the anniversary of the first lockdown many of us will be reflecting on a year like no other, writes Simon Shaw, of Duncan & Toplis.
The personal impact on many of us, our friends and loved ones will quite rightly be at the forefront of our minds as we think about the loss and suffering seen in our community.
For the business community, there will not be a single business that hasn’t been challenged by the events of the past year.
Businesses in certain sectors, including hospitality and travel, have certainly felt the worst effects of the pandemic and will be looking forward to the dates in the roadmap where they can start rebuilding their businesses.
The financial support given has been like no other, even though there still remains gaps and not every business will have been compensated for their lost profit.
Unfortunately, there will be some businesses which, despite their best efforts, will never return to pre-covid levels.
Many business owners have had to look at new ways of operating to adapt to the changing circumstances.
Although some of these changes have been out of necessity others have enabled businesses to become more agile and will see them in a good position for the future.
An example of this is the large-scale switch to working from home in certain sectors, which has reduced costs and given flexibility to employees.
I am sure the experience will not have been the same for every employee and many will have been balancing home schooling with a demanding working day.
We must, of course, remember the mental well-being aspect of this new way of working and employers will need to ensure a balanced approach is taken as the restrictions are lifted.
Businesses that have invested in new technology, either before or during the pandemic, will want to ensure the gains made by embracing new ways of working are continued into the post-covid world.
The use of remote working tools, including Zoom and other video communications services, have been adopted widely across many businesses to reduce travel and make employees more available to their clients and customers.
As businesses look to recover there will be other risks.
These might include lack of cash, shortage of materials, and a demand for skilled labour.
Of these, the pressure on cash will certainly be challenging as businesses return to pre-lockdown levels of activity. This might be caused by the need to re-stock, repayment of previously deferred tax and other liabilities and a reduction in cash reserves following periods of no or lower activity.
Having an up-to-date cash flow forecast drawn up on a week-by-week basis will be more important than ever.
This cash flow will enable businesses to have conversations with their suppliers, customers, bankers and other providers of finance to ensure that cash is available to move forward.
With the furlough scheme being extended until the end of September, businesses will be able to use this scheme at a time when trading activity might not be back to pre-lockdown levels.
An unfortunate but perhaps unavoidable consideration for some businesses is the prospect of redundancies when furlough ends. Businesses will need to ensure that they follow the correct procedures in dealing with any redundancies so that they do not leave themselves open to criticism later.
Finally, the National Minimum and National Living wage increases come into effect from April 1.
As part of these changes the National Living Wage becomes payable at aged 23 when it previously only applied to those aged 25 and over. The new rate for those aged 23 and over is £8.91 against the current £8.72 for those 25 and over.
I’m sure we will all have our own reflections of the past twelve months and be hoping that the year ahead will see better times.