By Michael Foote, the Managing Director of Quote Goat, a cost-comparison  

CBILS isn’t cutting it– time to address your overheads

As the UK enters its fourth week in lockdown as a consequence of the COVID-19 outbreak, it is clear that UK Plc is struggling. Food and drink establishments, entertainment venues, and indoor leisure and sports facilities are just some of the businesses that have been forced to close by order of the government.

To mitigate the danger to people’s livelihoods, the government has announced a range of measures to safeguard SME businesses including more than £90 million of loans under its Coronavirus Business Interruption Loan Scheme (CBILS). Sadly, the reality is many businesses are still struggling to access the cash they need. The latest British Chamber of Commerce (BCC) Coronavirus Business Impact Tracker survey revealed that to date, only 1% of firms had successfully accessed CBILS. More worryingly, 6% of respondents have already run out of cash.

Clearly CBILS is currently not delivering as expected. This leaves many business owners in a precarious situation as fixed overheads still need to be paid, regardless of the current circumstances. Fortunately, there are ways that cash strapped business can make considerable cost savings by using the current downtime to review their expenses and make them as cost-effective as possible. Taking the time to make the necessary changes now will yield dividends in the months to come.

Don’t take a chance on insurance provision 

Business insurance can be mandatory dependent on the type of business you run. If you are an employer, for example, it is a legal requirement that you have employer’s liability insurance. Even if it is not legally required many businesses benefit by reducing uncertainty on the basis that they can still operate if something goes wrong.

Typically for time poor business owners, insurance matters are often not prioritised and hastily arranged, despite its importance for the running of your business. You may be already overpaying substantially or have a policy that does not meet your current needs. Neither situation is a tolerable one given the uncertainty of our current situation.

Business Insurance can cover you for financial loss arising as a result of carrying out your business activities, including employment claims, professional indemnity, equipment, stock and premises. Unfortunately, the insurance market has made it virtually impossible to underwrite the scale of losses a pandemic can bring, and most policies offered reflect this.

A study by Intuit revealed that 1 in 7 SMEs were left unable to pay employees because of cash flow issues as a result of a business interruption. Such events have the potential to significantly impact cashflow and could result in a company having to shut its doors if they did not have the correct business interruption insurance in place.

Such insurance is essential for any business that cannot operate because of a natural disaster such as flooding and fire, to man-made events such as cyberattacks or more mundanely, equipment failure. Unfortunately, too many businesses incorrectly believe that their building or contents insurance will keep them covered and solvent in the event of an interruption. That being said, many insurers are still assessing whether their business interruption insurance policy actually insures again the coronavirus. It is therefore essential that you check your policy wording to understand the cover that applies and also speak to your broker should they have any queries or require advice about what that means for you a business owner.

Energy should power a business, not cost it

While it is unlikely that the coronavirus will impact security of supply, overheads such as your energy bills must be carefully scrutinised to save money that can be better spent elsewhere, especially if your business operations are energy intensive.

Often many businesses just settle for the biggest suppliers or the easiest option. This can prove to be an expensive mistake as the market can vary widely in terms of energy costs. How much money you can save is often dependent on your type and size of business, how many people you employ and your energy efficiency. If and when you make the switch, you should not receive any disruption to your energy supply.

Most business energy suppliers will offer a fixed-rate contract, which means that your unit costs will remain the same for the duration of your contract. You might find that longer contracts result in a higher tariff, but at least you’ll be protected from any unexpected price spikes for the duration of your deal.

However, it is also possible to agree a variable-rate contract, so the price of your energy could differ from month to month; while you also might want to consider rollover, deemed-rate and 28-day contracts, too. It all depends on your own specific circumstances and which type of business energy contract works best for you.

Short-changed by foreign currency providers

The latest Annual Business Survey from the  National Statistics (ONS), revealed that the number of SME companies exporting abroad increased by 6.6% to 232,000 (9.8% of all SMEs), whilst the number of large businesses who export increased by 6.1% to 3,500 (41.7% of all large businesses).

Unfortunately, the World Trade Organisation expects world trade to fall between 13% and 32% in 2020 as a result of the COVID-19 pandemic, which has also resulted in an ever-fluctuating exchange rate.

Therefore, it is critical for exporters and importers to remain competitive by doing everything they can to find the best exchange rates, while reducing risk and avoiding extortionate or hidden fees.

For small business owners, negotiating foreign currency markets can often feel dauting, and it can be a struggle to find the best rates available, especially as many bureaux de change are suspending financial services due to self-isolation measures.

Nor should traditional banks be your first port of call for sending or receiving money. While many do offer a great service, there are many specialist small business providers and currency experts who have the knowledge and expertise to meet the specific needs of SMEs and start-ups. The time you spend looking will definitely reap dividends.