A cashflow checklist - additional support in response to the lock-down
If you are concerned about your personal or business’ cashflow, it is worth running through the following areas:
- Prioritise expenditure. Work out what cash you expect to go out of your household or business either on a weekly or monthly basis. Split it into different categories: have to, nice to and luxury. In these uncertain times, if you’re concerned all spending should be restricted to “have to” only. “Have to” does not mean stop paying suppliers. We must try to support our local on-Island suppliers. Please try to continue to use local businesses and try to pay them promptly, they may be in the same position as you. If you don’t pay people why expect them to provide a service or the supplies you need.
- Breakeven cashflow. Once you know what your expenditure looks like you have the answer to what the minimum amount of cash you need to bring in is to cover all your costs.
- Consider your employees. We’re not HR professionals or lawyers so if in doubt you should consult an employment expert. Enter into open discussions with your employees. Review your employees’ contract terms and notice periods. Ask for their written agreement to any temporary changes in their terms. Remember that when you are allowed to trade again you will need people in place to start your business straight away. The States aim is to help employers retain their employees without laying people off (see point 8 below).
- Capital expenditure. Keep capital projects as planned if you can afford to and if you or others have the ability to deliver what is needed, otherwise put them on hold for 3 months.
- Review what money you owe. Talk to whomever you owe money to. Explain your circumstances, ask what options there are for settling your debts. Most people will be understanding in the current circumstances.
- Review what clients owe you. Speak to every client or customer who owes you money. If they are struggling as you are, agree some sort of payment terms. Any cash receipts are better than none. If they can afford to ask them to pay according to your normal business terms.
- Speak to your landlord. Most landlords will be sympathetic to a rental deferment as they will want you to continue as a tenant when we get out of this period of uncertainty.
- Speak to your Bank. Meetings and discussions have been held between local banks and the States regarding business support, so speak to your Bank Manager. Keep them informed of your position. The States have recently issued guidance on a loan/ overdraft guarantee scheme. Your primary contact will still be through your Bank Manager though.
- Mortgage holiday. This is normally an individual’s largest monthly outgoing. Check with your bank if this is possible and take advantage of it if you can.
- Business interruption insurance. Check your policies. Are you covered for pandemics? Check whether you are covered if you closed the business under your own decision or if you were forced to by the Government and/or by Law.
- Speak to the States of Guernsey business advisors. Certain business sectors are getting specialised support measures at this time. Alternatively ask us and we can advise. https://www.gov.gg/covid19businessguidance
- Social Security and ETI/Income Tax payments. You’re probably aware that you are able to defer paying the Employers social security contributions for Q1 and Q2. Take advantage of this facility if you need to.
- Pension contributions. You may be able to stop making pension contributions for a few months. You should speak to a financial advisor if you are unsure.