Pay Day in April is creeping up on us and today we are going to share some of our experiences around the government support for businesses during the Covid19 lock down.
April is Stress Awareness Month and there certainly was a lot of stress around the government portal for claiming funds for the furloughing of staff. Would the portal crash? Would everyone try to claim all at the same time? Will the money come through for payday? Would it take forever to fill out the online forms?
Well here we are and the deadline for claiming money for furloughed staff’s wages for April has now passed. Those who claimed should get the first payment by the end of the month.
Our first ‘furlough’ experience:
We are pleased to report that our experience has been positive so far. Our clients are SMEs and we’ve been able to help those who have furloughed staff with a degree of ease.
One of our team, Charlotte, made the decision with her clients to not ‘pile in’ the minute the portal opened, just in case the system went down. However when she did access the portal, it worked and the process went smoothly. We are now all waiting for the monies to land in clients’ accounts so that they can start cash flow planning for May and beyond.
One word of caution though. The furloughing is made up of three main elements – gross pay, part of the employers’ NI contribution and part of the employers’ pension contribution. If as a business, you’ve claimed the small business NI rate relief of £4,000 – you should claim the NI part of the furlough calculation. If you do this by mistake rectify it on the next claim.
For others who run payrolls with staff working variable hours it’s been more challenging – with HMRC updating the online calculator two days after launch and not responding to queries within 48 hours of them being made – very frustrating.
Is furlough working?
For us and our clients it is – though it is not ideal and it is clear that it won’t suit every business.
How could the government, in such a short period, come up with a ‘one size fits all’ solution? Business is very nuanced and set up in different ways. It will be interesting to see if further changes come on stream over the next month.
One point to make is that you can, if you wish, take staff in and out of furlough or you can rotate furlough around your staff members if, say, a big piece of work comes in? To do this effectively and legally, please get in touch as we can support you with this as it does require some planning ahead.
Business Continuity Loans (CBIL)
The loan system has not been easy to navigate and we hope to see the process become more seamless and quicker throughout May. We’ve worked hard with relevant clients throughout March and April to get their applications in to their banks.
The process to apply is onerous – not very different from applying for a business loan at any other time. It’s long-winded and it seems that it will take six to eight weeks for any monies to come through. Some banks at least have agreed to allow companies to extend their overdrafts so they can pay their staff this month. This does need to be addressed.
One other comment around this is that banks are asking businesses to provide a two to three year plan to ‘prove’ what their future performance will be to pull themselves through lock down and thrive afterwards.
It’s very tough to offer a full-proof plan when we are in such an unpredictable situation. How can any business say with certainty where they will be in three years’ time if they are again impacted by factors beyond the control of anyone?
If you have applied and been unsuccessful then try another bank – it does not have to be via the bank you hold your business current account with.
For those clients who qualify for grants, we’ve found that they’ve been paid very quickly which is very good news.
However once again don’t assume that many businesses qualify for this. We’ve found at least one client, with a profitable business, and multiple sites does not qualify – and this business is in the hospitality sector.
The impression has been given that most companies in this sector will be supported, however some are not. In this case, getting a grant for each site could be the difference between failure and survival. This is a profitable business which so far, has fallen through the cracks because the ‘system’ does not flex enough to help them.
We are hoping that over the coming month we will be able to support and work positively to get all of our clients through this difficult time – and also to support anyone who is looking for a tech-led, responsive and dynamic accountancy partner.