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COVID-19: Helping your clients through the crisis

Jennifer Adams considers practical ways in which practitioners can support clients through the coronavirus crisis and retain as many of them as possible for the future.

16th Mar 2020
AccountingWEB
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Emergency preparedness supplies. A large pile of supplies to be used in case of a natural disaster (hurricane, flood, earthquake, etc.) including: flashlight, backpack, batteries, water bottles, first aid kit, lantern, radio, can opener, mask. No people.
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Larger companies may already have a disaster recovery plan in place. Cybersecurity concerns will have encouraged them to develop a business continuity plan in the event of a catastrophic computer systems loss, but few businesses will have considered the potential impact of a massive epidemic such as the current coronavirus crisis.

It is odds on that our smaller clients are too busy trying to make a living to have even thought about such matters. As accountants, we are best placed to consider the financial impact that this outbreak will have on each of our clients' businesses and ours. If they go under then we also lose business. 

Below are some thoughts as to what could be done:

1. Keep in touch

In any crisis, clients are looking for a guide. They want to know that there is someone there who cares about their business, so send an email round to clients, and phone any who do not email. Tell them that you will keep in touch and stress that they must do the same. The sooner that you are made aware of any problem, the easier it might be to solve especially with reference to HMRC payments.

Speak to the bookkeeper (or whoever is doing their books) so they know who you are. Send round an email newsletter with reminders of your contact details, details of the various government links to view (see point 7) and reminding them that the earlier they get their accounts info to you, the easier it will be to plan tax payments. Even if clients think they are OK and will weather the storm, they should at least be made aware that assistance is out there.

Make them promise that if it gets to the point that they believe they will have to put the business up for sale, they will do nothing until they have spoken to you. They won't get a good price in this market. The number of clients who take notice of their friends and take action without consulting with their accountant first is surprising. The answer will not always be to go bankrupt or close the company. 

2. Consider clients’ cashflow

Review all clients for potential problems as far as you can. You will probably know which clients are secure and which live hand to mouth. Contact those who could meet with problems and direct them to help (see points 7 and 8).

3. Confirm tax bills earlier

In times of crisis, it's always easy to defer such things as doing accounts, but this will be the best time for clients to get on the case. Start issuing reminders earlier and more frequently to get their accounts out of the way and plan the tax bills coming. This will also make your workload easier, especially if you or your staff have to isolate.

4. Check out those in potential problems with HMRC

Check whether each client has paid their last tax bill. If not, tell them about HMRC's Time to Pay Service. All businesses in financial distress and with outstanding tax liabilities may be eligible to receive support. Consider those who might have difficulty with the July payment and advise accordingly. 

5. Investment in capital items

Investment advisers say that you should have a cash pile of at least two months to weather any financial storm. Many clients won't have two months set aside, but those that do and might have been considering making a large purchase such as a van could find that that the deals are more favourable now than previously.

6. Check insurance policies

Advise clients to check out any insurance policies they may have – would they, or their staff, be covered in any sickness claim? This is the value of having keyman insurance.

7. Government help

Make sure that you are up to speed with government guidance including the COVID-19: guidance for employers and businesses factsheet. Advise clients of this guidance.

This Budget paper advises what needs to be done if Coronavirus is suspected among any members of staff and details the financial measures that are being made available including:

  • Refund for businesses and employers required to access Statutory Sick Pay 
  • A 100% Business Rates retail discount for one year 
  • Funding support for those small businesses that pay little or no Business Rates because of Small Business Rate Relief
  • The Coronavirus Business Interruption Loan Scheme

8. Financial Help

Suggest to all businesses to investigate what help is available from their bank, what terms and conditions there are, and whether the help is currently needed. RBS, Lloyds Bank and Barclays have pledged to offer support by mortgage repayment holidays, temporary increases in credit card limits, waiver of fees on early access to fixed savings accounts and late credit card, mortgage, and loan payments.

9.  Supply chains

Suggest to those clients who are outside source supplies to contact their suppliers. Suppliers will be more likely to contact them if they have to resort to restrictions. Advise investigating alternative suppliers. Supply chain issues are already threatening to derail some small businesses. Advise the client to investigate the whole supply chain – they may say 'it's OK I get my supplies from XYZ Ltd based in the UK', but does the client know where XYZ Ltd gets its supplies from?

10. Late payments

When cash is restricted, the temptation is to make late payments. This must be resisted, if only for reputational reasons. Late payments are already causing problems for businesses as 74% of business owners reported invoices due to be paid at the end of February had not been settled and were unlikely to be cleared before the end of March (business lender MarketFinance.com). Advise clients to check their debtors, and check your own debtors. Review which clients are more likely to get into difficulty and suggest they pay your bill by instalments (if such arrangements are not already in place). Tighten up your invoicing processes.

11. Review business costs

Advise clients to look at all costs and reduce discretionary and non-essential expenses as far as possible. Fixed costs such as wages, rent, utilities, financing costs and tax liabilities not affected by a decline in sales need to be properly managed. Suggest investigating whether costs can be spread rather than paying in one lump sum (e.g. car insurance).

12. Review marketing strategy

No one is going to do or buy much other than the essentials during this crisis and, although this situation might lead you or your clients to reduce costs by rethinking the marketing strategy, this might not be the right time – consistency is key to recovery.

13. Review mortgage payments

Banks will be lending cheaply. Advise all clients (businesses or not) to consider remortgaging. Mortgages are based on past data, which will invariably be better for these past three years – defer applying and that may mean lending based on reduced profit figures making it more difficult to get a mortgage. 

14. Carry on

It is vital that the business must at least give the impression that it is carrying on. This may be impossible if the business is a restaurant, but is feasible for the many others who might have to self isolate. There are such businesses as Virtual Assistants that can help. 

If you have the facility to invite clients into your accounting software, now might be a good time to place this at their disposal. Consider plugging their books into bank data feeds, if not already used.

And finally, 15. look ahead

The coronavirus crisis will change the way businesses and society works. When the urgent part of the crisis is over, businesses should consider what this crisis changes for them, what they have learned and plan for any future crisis.

It’s important to look ahead. As Eliot Hoff, the head of APCO Worldwide’s Global Crisis Practice has said about the virus: “There will be an end to this, as there is with every crisis.”

How has the coronavirus outbreak affected your business so far? Have you been able to get practical help and where are the struggles occurring? Share your experiences and tips below so we can bring the AccountingWEB community's collective expertise to bear on issues that are affecting all of us.

Replies (10)

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By sally1964
17th Mar 2020 10:06

Do you know how clients can apply for the small business grant of £3000?

Thanks (1)
Replying to sally1964:
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
17th Mar 2020 10:33

This is one of the big questions that has been circulating since last Wednesday. Aweb members have been discussing it here:
https://www.accountingweb.co.uk/any-answers/small-business-grant

News of any successful attempts would be very welcome and we're going to see how far we can get when chasing a claim.

Thanks (1)
Replying to John Stokdyk:
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
17th Mar 2020 17:33

17 March, 5:15pm - The business rates holiday has been extended to all businesses, and the small business grant has been upped to £10k Chancellor Rishi Sunak announced at today's Downing Street press conference.

Plus £330bn in loan guarantees to help businesses through hardships caused by coronavirus. "We will do what it takes to defeat this enemy" was the recurring message from Prime Minister and Chancellor.

No paperwork as yet to detail how businesses can actually get their hands on all this support, and Robert Peston asked why they're using debt to support businesss when it could just undertake to cover their liabilities... (think that would definitely break existing rules).

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By ohgoodgodno
17th Mar 2020 13:58

not sure on point 5 - why would you advise a client to blow their reserves on a new van - just because its a bit more of a bargain now??

Surely better off holding the cash to cover essential costs and the unknown at this time

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By carnmores
17th Mar 2020 15:25

it's all too little too late this is bog standard stuff that accountants should be on top of anyway and generally pretty banal

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By VP
17th Mar 2020 16:32

Thanks for sharing. Not everything is always obvious until someone points it out!

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Replying to VP:
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By carnmores
17th Mar 2020 16:47

I really don't buy that but heyho..

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By Carl London
18th Mar 2020 07:09

Some decent points, thanks. It has prompted me to contact some clients already. Much more sensible than the last CV-related article on AW!

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By lukeoliver
18th Mar 2020 18:44

I believe that new rates bills are being issued following the recent changes and guidance for local authorities on the business rates holiday will be published by 20 March

You should not need to claim the reliefs, they will be linked to your business categorisation on the rates bill.

The timing of any grant payments is still uncertain but they should be paid in April.

The 3 rates reliefs are

• a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief (this is for all businesses, not just retail, hospitality and leisure)
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000

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Stephen Quay
By squay
01st Apr 2020 18:23

Just received an email from our local council inviting me to go online and enter my small business grant claim which I have now done. I've already had my 2020-21 rates bill which is nil again as I get small business rate relief. No surprise that they have had thousand's of applications so will just have to wait and see. I can't believe that we may get a grant of £10,000 for free. I expect the worst and hope for the best.

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