The Job Retention Scheme (JRS) – or the ‘furlough scheme’ has been a lifeline for many UK businesses during the ongoing COVID-19 pandemic.
The scheme has provided short-term financial support for businesses during the UK lockdown, allowing companies to pay their workers 80% of their usual wages whilst the workforce is furloughed and out of work at home.
This has helped to preserve jobs and reduce the necessity for sweeping job cuts. It’s also kept the workforce on the payroll and ready to return to employment once the business is up and running again. If you’ve made use of the furlough scheme, you’ll need to prepare for when the scheme comes to an end in October 2020.
The Government is introducing a Job Retention Bonus that is a one-off payment of £1,000 to employers for every employee who you have previously claimed for under the scheme, and are retaining as an employee through to January 31 2021.
Ensuring you’re on solid financial foundations after the furlough scheme
Prepare now for an end to the scheme, with workers returning to full employment and the imminent impact on your payroll costs.
Planning and reviewing your financial situation will be critical. And that means taking the time now to prepare and get ready for the scheme closure.
Here are some key areas to focus on:
- Review your sales and revenue pipelines – you need to know (with some clarity) what money will be coming into the business from October onwards. Look at your sales pipeline, run revenue projections and give yourself an informed overview of how much income will be generated and how this will affect your financial position.
- Assess your cashflow and working capital positions – getting in control of your cashflow will be critical to coping with this drop in financial support. We can help with detailed cashflow statements and forecasts and check that the business will have the required liquid cash and working capital to cover your increased payroll costs.
- Review your workforce requirements – production levels and customer sales are likely to be down in the post-lockdown market. Look at what people you will need to run your current services or produce your current level of products – do you need everyone on the payroll, or only a percentage? The decisions you make on staffing will be crucial, so this will need plenty of thought and consideration.
- Cost-saving measures – if there’s likely to be revenue and cashflow gaps come October, getting serious about cost-cutting will be necessary. Look at the options for freeing up cash, cutting overheads and expenses, or accessing additional finance – so you have the money needed to keep people on.
- Making people redundant is obviously a last resort – if none of the cost-cutting, funding and staffing options are possible, then you will be faced with some stark decisions regarding redundancies and losing staff.
The sooner you start planning and making changes, prior to October, the better prepared you’ll be to survive the last quarter of 2020.
Talk to us about surviving the end of furlough
If you have furloughed staff and want to be ready for an end to the furlough scheme, please do get in touch. We’ll help you review your financial health, improve your cashflow position and prepare the business for the next chapter in its success story.
Get in touch to plan your furlough exit.