Finance 18 January 2021

How to thrive (not just survive) in 2021

Todd Davidson - MD of Purbeck Insurance Services
“Understanding your financial position including your cashflow might be painful but it?s vital.”

Name: Todd Davison

Position and company: MD of Purbeck Insurance Services

Bio: Todd?Davison?qualified as?a Chartered Accountant with?the?Institute of Chartered Accountants England and Wales (?ICAEW?) in 2013.??Todd founded Purbeck Insurance in May 2016 alongside the founding Directors to provide an insurance solution for Director?guarantors, giving them the confidence to access business finance and pursue their growth objectives.?? Since launch in June 2017, Purbeck Insurance has supported SME Directors on over ?100,000,000 of Personal Guarantees.

How can businesses best prepare for a financially sound 2021?

Fully understanding your financial position including your cashflow might be painful but it?s vital. We know many SMEs don?t have the luxury of a Financial Director so the services of an accountant should be called upon if the financial expertise isn?t in-house.

“Careful financial forecasting is essential to establish businesses needs and whether any additional funding is required to sustain and grow the business.”

It?s also important to assess any impact to the supply chain as a consequence of the pandemic and anticipate any disruption to supplies.

Finally, consider your customers and whether any are struggling to meet contractual obligations. What impact would this have on your business?

It is important to work out a clear strategy to deal with late or non-payment ? that might be through credit control, taking legal advice, limiting credit terms or a combination of all three.

What advice would you give businesses planning ahead to repay government loans, specifically BBLS, CBILS and CLBLS?

Before SMEs can consider how to repay Government loans, they need to have a clear understanding of their revenues and expenses. Based on this intelligence, if you know you are likely to face financial difficulties, the ?Pay As You Grow? initiative can help to extend the term of the repayment obligations.

You can also look to take advantage of payment holidays.

“Fundamentally you need to get on the front foot and instigate dialogue with lenders rather than leave difficult discussions to the last minute.”

Using a commercial finance broker or accountant to help obtain additional finance or to refinance existing debt obligations is also highly recommended if the repayment terms and timings are going to be difficult.

What areas should business leaders be focusing on investing in during 2021?

Investment in the business is usually based on a thorough assessment of the financial returns (NPV/modelling), impacts of culture/reputation and business sustainability and robustness.

Investment decisions in 2021 however should be based on a regular strategic assessment of the existing cost base and financial commitments to establish the necessary spend for the business to operate ? for example, can employees operate effectively remotely?

If so, could the business reduce its office/physical presence to make savings and/or renegotiate with landlords?

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