The Coronavirus pandemic and associated lockdowns have caused unprecedented disruption for UK businesses over the past year. To combat this the government unveiled a series of measures to help companies ride out the storm until things started to get back to normal.
Some of these measures include the bounce back loan scheme, which we covered in a previous blog, and the Job Retention Scheme (also known as the furlough scheme). Now that the end of the latter measure will come to an end in a few months, it is time for firms to turn their attention to what will happen afterwards.
For some, it may mean restructuring their operations, while others may be forced to make redundancies. Some companies might not have been considered what they will do when the scheme comes to an end.
Whatever your situation, our job retention scheme guidance will outline several important points for you to consider.
How does the Furlough Scheme Work?
Before we delve into our job retention scheme guidance, we will quickly outline how the system actually works. The incentive enabled companies to put their staff on furlough, but retain them on their books until they were required to come back. This allowed the firms to save on wages without having to make any redundancies.
The government would then pay 80% of the furloughed staff’s wages, up to a cap of £2,500 per employee per month. The employer would not have to top up these wages, meaning they would only be liable for National Insurance and workplace pensions contributions.
These rules are set to change in July, where the government will only contribute 70% and employers will need to cover the remaining 10%. In August, business owners will have to pay 20% and the government will contribute 60%.
Employees could be put on furlough, as long as they were employed on or before:
- 30 October 2020 (for claims ending up to 30th April 2021)
- 2 March 2021 (for claims starting on or after 1st May 2021)
Any of the following could have been put on furlough, whether they work full or part-time:
- Agency workers
- People on zero-hour contracts
Job Retention Scheme Guidance
With the end of furlough fast approaching, it is now time for companies who have taken advantage of the scheme to take stock of their situation and plan what their future will hold. Our job retention scheme guidance will outline what you should be considering.
It is important to understand that there are options available to you, however it is essential to take swift and decisive action to give you the best possible chance of success.
Do You Know Where Your Business Is?
The first part of our job retention scheme guidance is to carry out a wholesale review of your business. This will tell you exactly where you stand and whether you will need to take action to steady the ship before furlough comes to an end.
Assessing areas such as cash flow and solvency will be particularly important to judge whether your company is in good financial health and is able to cope with the influx in costs that the end of furlough will bring. It is therefore a good idea to seek expert guidance from a professional services advisory firm, which can perform a thorough review of your company and point out areas for improvement. They will also be able to recommend potential areas for restructuring.
Have You Planned Ahead?
Once you have a clear idea of where your company is now, the next thing you should do is look to the future. How are you going to get back to winning ways? Will you be able to pull back your revenue straight away, or is it going to take a while before you return to pre-pandemic levels?
Bringing back employees from furlough is naturally going to incur potentially significant costs, given that you will be 100% responsible for their salaries once again. Have you budgeted for this? Will your company be able to cope?
If you are not sure about any of this, it is essential that you seek specialist advice. A professional services advisory firm will not only take stock of your current situation, but also help you plan ahead and prepare for any potential hurdles that may arise.
How Will You Cover Debts?
If you are currently paying off debt, whether it is money you owe to HMRC or any other creditor, will you still be able to keep up with these repayments when your employees come back from furlough? If the answer to this is no, or you are not sure, it is important to act now.
There is still time to act before furlough ends, and there will be many different options available to you. A professional services advisory firm will be able to gain a thorough understanding of your individual circumstances and recommend what they believe to be the best possible solution.
This will help you get your finances back onto the straight and narrow, and ready to welcome back your workers.
Is Extra Funding Needed?
Once you have completed the review of your company, you may find that you need an injection of cash to help you prepare for the end of furlough.
The good news is that there are plenty of options available to you, however they may not all be suitable for your business.
This is why seeking specialist advice is essential. A professional services advisory firm will be able to gain a complete understanding of your business and take you through a range of corporate funding options that are tailor-made for your circumstances.
Will You Need to Make Workers Redundant?
This is something no business owner wants to think about. Unfortunately, you may find that you have no other alternative but to make workers redundant. A specialist professional services advisory firm can help you through the process to ensure everything is taken care of.
How Inquesta can Help
As you can see, there are plenty of essential points you will need to consider before your workers return from furlough. The good news is that you still have time to act, and you don’t have to go through it alone.
The Inquesta team are experts in business restructuring. From carrying out thorough and independent reviews of your company, to helping you sort out your debt, to recommending what we believe to be the best sources of funding, you can rely on us to help.
We have amassed decades of experience in assisting businesses from all areas of industry, meaning we are perfectly placed to do the same for you. Our expert team is dedicated to achieving the best possible results for our clients, so you can be confident you are working with someone who has your best interests at heart.
Inquesta can help whatever your circumstances may be. We understand that no two companies are the same, which is why we will carry out a thorough investigation of your situation and recommend what we believe is the best course of action for you.
For more information about how Inquesta can help, contact a member of our team or request a consultation today.