How to Manage your Business Finances during the Coronavirus Pandemic
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Keeping your business alive and your finances intact during the coronavirus is going to be tricky. Of that, there is no doubt.
Maybe you have a contingency fund that can see you through this period. But many businesses are not that well-prepared or lucky enough to have the spare finances to do this.
Although many countries are starting to ease the coronavirus restrictions, business recovery and stability will take longer. So what can you do to keep your business running during the coronavirus restrictions?
- Well, first, it is essential to get all your financial records up to date. It is very easy to let your business accounting slip a little. But to qualify for German state assistance, you must keep them up to date.
- Keep in close contact with your accountant. They should be the first to know of the regulations surrounding government coronavirus aid schemes.
- Examine your business finances and prioritize your expenses.
- Outstanding invoices should still be chased, but perhaps more compassionately. Other businesses are suffering just like yours.
- Can you carry on your business, but in a different way? Can you work with your customers differently to protect your income?
Separate Business Finances Account
A separate business account keeps your personal and business transactions organized. You can track where your business income is going, and it helps when submitting your tax declaration in Germany.
Review your Costs
Keeping track of your business costs is always good practice. But in the current climate, with the coronavirus lockdown, it’s vital to know where the money is going.
Using your Penta Business Account makes this task a lot easier.
For every expense, you can upload a photograph of the receipt and categorize your business spending. Knowing exactly where the money is going makes it much easier to identify which costs are essential. And which you can cut out during the coronavirus period.
Your finances can be complicated, so first split them into groups;
- Essential to keep the business running. If you run an online business, for example, then keeping the website live is clearly essential.
- Costs that can be delayed. Projects that had been planned, such as staff events, or replacing equipment, can be delayed until the company cash flow is stable again.
- The government may offer assistance. Keep an eye on government announcements as new schemes are introduced to assist businesses during the coronavirus pandemic.
Is there a German Government Scheme that can help?
Governments around the world have enforced lockdown restrictions to prevent the spread of the virus, and Germany is no different. But this means closing businesses down temporarily. To help them survive, and get the economy going after lockdown, many governments are assisting.
The German government has put in place a series of loan schemes that many businesses can use. In essence, the program offers a government-backed loan with very low interest rates. The funding is intended to help the company pay its staff and remain functioning during the lockdown.
Your business liability for tax payments has been eased in Germany during the coronavirus. This is only a temporary measure but is welcome all the same.
- Tax payments may be deferred if paying now would cause difficulty.
- If your expected income this year is severely affected by the coronavirus situation, tax pre-payments may be reduced.
- Fines and enforcement measures for late payment of tax will be reduced or waived.
In all cases relating to tax, it is advisable to consult your accountant or tax advisor as soon as possible.
Short-time Working Incentives
Companies that see a downturn in their orders due to the coronavirus may take advantage of the short-time working allowance. This allows the company to reduce working hours as long as at least 10% of the workforce is affected.
An additional part of this scheme relates to advanced training for your workforce. Payments are available where advanced training is given to replace the lost hours of work. This can be retraining for a new project or maybe cross-training employees to fill other existing roles.
Keep in Contact with your Customers
Now is the perfect time to update your customers on the business. Contacting them via email or social media reassures them that your business is still running.
Reminding your customers of your products and services is always useful. But when the lockdown is lifted, those companies that have been proactive will be the first to come to mind. The amount of work available after the lockdown ends is expected to be significantly lower. Make sure your business is at the top of people’s list and the first one they call.
Can you still help your Customers?
There are many ways to adjust your business operation and continue to generate an income.
Restaurants can switch to deliveries. Cleaning companies can rent their equipment to customers instead of providing cleaners, such as carpet cleaning.
Maybe this is the time to invest in the online shop you’ve been considering but kept putting off. Creating an online shop can be a huge task. So start small, adding your biggest selling products first. As you have time, build up your online store.
The staff that would normally serve customers over the counter could be re-deployed as delivery drivers during the coronavirus.
Fitness instructors, yoga teachers, and similar can hold online classes using web-based tools such as Zoom or Messenger Video.
The main aim is to survive the coronavirus lockdown and come out at the other end, ready to go.
Final Thoughts on Business Finances
Yes, the coronavirus restrictions are severe for many businesses, regardless of size. But careful planning may allow the company to carry on trading, and even come out stronger at the end of the pandemic.