Covid-19: How Accountants Can Support SMEs

Accountants play a key role in supporting the financial health of small businesses, especially in times of crisis. The coronavirus pandemic is certainly a crisis point, with many business owners wondering how, or if, they can survive.

Though some traders might be reluctant to pay professional fees while their income shrinks, accountants can be a valuable business resource.

Along with preparing a set of accounts, their experience in the field means they can provide practical guidance to help businesses weather the Covid-19 storm. A good accountant will be proactive in looking for ways to help. If you’re not sure what questions to ask, try starting with these:

What funding and grants are available for my business, and am I eligible?

The government set out a series of financial measures to get money to businesses and employers suffering as a result of the Covid-19 crisis. In their own words though, they can’t help everyone, and there’s a danger that some people may be left behind.

Company directors, for example, have been financially vulnerable during the pandemic. Technically employees of their own company, they don’t qualify for the Self-Employed Income Support Scheme (SEISS) grant. Because most directors pay themselves a smaller salary and then supplement this with dividends, they don’t get a great deal of support from the Coronavirus Job Support Scheme, either. 

Accountants are at the front line of business support, with a terrific vantage point of what funding is available, who from, how to get it, and what everyone else is doing. Whilst a good accountant should be sending out information about support on offer to businesses struggling through the pandemic, it’s well worth asking the question. Where the funding rules allow it, they can also make the applications for you. It's worth looking into the following as a starting point:

• Coronavirus Business Interruption Loan Scheme
• Coronavirus Bounce Back Loan Scheme
• More time to pay tax bills
• Local and additional restrictions grants, for businesses forced to close in lockdown
• Deferred VAT payments
• Support from alternative finance providers

You can find out more about these schemes, and other financial support, here. 

Can I be more efficient with tax?

If there are expenses to claim, an accountant should be offsetting them against tax. An accountant can assess whether a sole trader business could be more tax-efficient by forming a limited company. Similarly, if you're buying a lot of VAT-taxable goods, but selling zero-rated items, voluntary VAT registration might be very useful.

A good accountant will regularly assess the tax efficiency of the business so that it doesn’t make unnecessary tax payments. Having a complete view of how tax works in different scenarios means an accountant can see beyond the status quo and suggest practical changes.

How can I improve cash flow efficiency?

The sudden slump in demand, and therefore income, sadly doesn’t impact the need to pay the bills. For those small UK businesses wondering how they will, quite literally, keep the lights on, cash flow management is brought sharply into focus.

And, once more, this is something that a good accountant should be monitoring. Not only are they a fresh set of eyes on business processes which are stuck in a rut, they also have a lot of cash flow insight.

Most businesses are surprised at the small practical steps they can take to improve cash flow, without actually having to put a lot of work in, such as:

• Automating how a business reminds customers to pay their bills is a classic example. Once invoiced, the customer receives regular automated reminders until they pay their bill. Getting the cash into the business on time, rather than chasing up late payments, will improve cash flow and reduces some of the admin burden.
  
• If customers are just consistently late paying their bills, ask for full or part payment up-front. It’s not an unreasonable request and helps get cash into the business.
  
• Examine existing costs - have the utilities contracts rolled over for years? Or the insurance policy, or the phone and internet contracts? Reviewing supplier contracts or policies could help negotiate better deals or longer payment terms with a bit more breathing room.

What additional accounts, payroll or bookkeeping support can accountants provide?

Many accountants provide additional services, which might be available as discounted add-ons, or bundled packages. It can significantly reduce the total professional fees the business needs to pay for.

There are other services too, which might not seem so obvious. For instance, the pandemic has resulted in many bricks and mortar businesses making the switch to ecommerce. An accountant can advise on payment handling for ecommerce, as well as ways to automatically integrate it with bookkeeping records.

Their experience means they’re also able to reduce the amount of effort spent on time-consuming administration. Their industry knowledge can help a business identify and take advantage of opportunities to save money, get help, and grow.

About the Author

Elizabeth Hughes is the Content Manager at Pandle, specialising in business, finance and software. Pandle is a refreshingly simple and easy-to-use accounting software allowing users to automate bank reconciliation, view financial reports, upload receipts and manage invoicing.