From June 21st, 2021, the government has now declared its intention to have all UK businesses back up and running and free of lockdown restrictions. 

As with all of these announcements, it’s worth noting this date depends on the continuation of the reduction in COVID-19 infection rates. If the measures put in place and the vaccine cannot control the virus’s spread, a return to lockdown seems likely.

But with the information we have so far, you may be wondering about the challenges your business may face as we emerge from the enforced hibernation of nearly a solid year?

How have you and your business done during lockdown?

Companies have almost nearly all fallen into one of the below two categories:

1. Unable to trade.
2. Limited ability to trade.

For example, the entertainment and hospitality sector has been hit badly – the financial costs have been dire. Companies have little choice but to go into liquidation or have used savings to fund their losses. Those that remain in this group have a hard road ahead.

Some companies have managed to maintain some semblance of trade and may have even sustained profitability – likely at a reduced level – but are still solvent and in control of cash flow.

In both categories, limited ability to trade and unable to trade, business owners have probably availed themselves of government grants. They may have taken out Bounce-Back or similar loans with their bank.

Each group faces different challenges as we approach June 21st and head back to ‘normality.’ Below, we’ve sketched out some possible challenges and how An Accounting Gem can help you get your business back on track.

Unable to trade during lockdown

If you fall into this group and cannot see a way forwards, please call An Accounting Gem as a matter of urgency, and we’ll help you look at different options. In the worst-case scenario, even the liquidation process needs to be appropriately planned. An Accounting Gem could be able to help you keep some of the personal investments you’ve made in the business. In some cases, we could see a way forward for the company that you’ve not seen as yet, and be able to assist you in continuing trading.

If you have some of your reserves and savings left, planning your business’s reopening will be imperative. Of critical importance will be your cash flow, and you manage it. Companies that sell goods on credit but must buy from suppliers on less attractive payment terms could find that there are periods where cash reserves run out. Producing and looking at realistic estimates of expenditure and income for, say, the next year will highlight these dips in cash flow and allow you to plug the gaps from other sources or overdraft funding.

Limited trade during lockdown

The restricted trade period would have probably reduced your cash reserves, especially if this has involved funding losses. Ironically, suppose the end of lockdown increases the demand for your products or services. In that case, the increase in turnover will not immediately impact your cash flow if you’re offering less generous payment terms of suppliers and more generous payment terms to your customers. It’s worth remembering too, you’ll have some taxes and fixed costs that need to be accounted for.

Dealing with a reduction in trade is challenging, but planning for an expansion of activity can be just as tricky. We can help you create realistic budgets, all integrated into your accounting software, thus providing an invaluable business tool.

Planning is key

We should all step into this changing marketplace well aware of the pitfalls and opportunities that wait for us. We should have financial considerations and a robust plan of action.

Whatever the current circumstances of your business, contact An Accounting Gem to help maximise the possible boost to trade following lockdown easing.

Come June, you should be more than ready to meet the challenges it will present. We will be working hard with many of our clients to ensure they have the best possible resources to meet these obstacles.

Call us today on 01473 744 700, visit our website aag-accountants.co.uk or email contactus@accountinggem.co.uk. We’re to help every step of the way.