< Previous20 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX Will the way your business has behaved during lockdown have a greater impact than you may have thought? By James Pinchbeck, Partner at Streets Chartered Accountants It is emerging that how businesses have and are behaving during lockdown is likely to have an impact on their road to recovery. Whilst business leaders understandably were quick to respond to the introduction of lockdown, and to some extent this was a universal approach, the approach to managing businesses in lockdown has been wide ranging. Whether intentionally or unintentionally the actions taken by businesses in terms of managing their staff, supporting customers and dealing with the challenges presented by COVID- 19 are likely to affect more than the bottom line. In the majority of cases businesses have experienced a significant drop in turnover and for some there has been, hopefully only temporary, a loss of all revenue. As such, when looking to open up again one of the key challenges will be re-engaging with customers. Herein lies the rub and the big question, do customers want to re-engage with you or have they gone or are thinking of going elsewhere? It would seem that how you have managed customer relationships and communication with them will have a significant impact on how they re- engage post lockdown and that businesses that have endeavoured to keep in touch will fare better than those that haven’t. This might be thought of as your reputation value. Certainly, being out of sight is giving rise to out of mind, with customers feeling less connected move which has certainly hit the bottom line. This is recognised not just by employees but customers, with those businesses earning more kudos and respect putting the situation over and above profit. In a world that is so well connected the business of every business seems to be the business of not just the stakeholders but the wider public. Social media coverage is hard to manage, with news and opinion spreading widely and quickly. Perhaps one of the key influences has been how employers have treated and supported their employees during the crisis. Those who have been able to and have gone the extra mile to support their staff seem to have weathered the storm better than those who might not have done. Whether it is financial support, changes to working patterns, the provision of equipment to enable working from home, or just simply keeping in touch, all impact on the loyalty and resilience of your staff and also the viewpoints and perception of your customers. We are more likely than not to face more challenges ahead as we transition through lockdown to recovery. The challenge for business leaders and their teams is to consider the much wider implications of their actions on their business as they respond to the difficulties and opportunities presented by the current situation and what is being described as the ‘new normal’. and at risk of seeking alternative providers and supply. Whilst it might not have been easy to adapt your business model to continue to trade, those businesses that have been able to do so seem better placed for retaining customers, even gaining new ones. Approaches such as restaurants offering takeaways and garden centres offering home deliveries through to developing an ecommerce provision, more favourable payment terms or just providing advice and support have been well received by customers affected by the current situation. Perhaps the greatest positive impact on customers has been how businesses have responded to and contributed to the challenges faced by COVID-19. Examples of this range from fundraising to help frontline workers and switching to making PPE to developing new digital or technology applications to help with the situation – these are all being well received not just by business stakeholders but also the wider community. Understandably, all businesses have had to take a long hard look at their finances. Survival invariably has and will depend on the availability of funding and being able to manage costs for what seems to be an indeterminable period of time. For most, balancing the books has involved a mix of looking after the livelihoods of employees and safeguarding the life of the business, a 20-21.qxp_Layout 1 05/06/2020 09:35 Page 120-21.qxp_Layout 1 05/06/2020 09:35 Page 222 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk INSURANCE The economic and political uncertainties pervading the global marketplace means financial dangers abound for businesses. The continuing coronavirus crisis has only thrown fuel on the proverbial fire and made matters worse for many businesses. Although the pandemic has given rise to another challenge for companies to overcome, there are a myriad of risks and dangers that can lead a business going bankrupt or calling in the administrators. Whether it’s unexpected legal costs or damage to one’s workplace, it’s important that businesses defend themselves against every threat. Currently, the only type of business insurance that is mandatory under UK law is employers’ liability cover, but by not adequality protecting themselves, businesses are putting themselves at serious financial harm, risking not only their operations but the livelihoods of their employees. The UK insurance industry is the largest in Europe and the fourth largest globally, managing investments of over £1.8 trillion, paying nearly £12 billion in taxes to Government, and employing 300,000 people. Although two thirds of premiums paid out are for life insurance, the importance of business insurance can’t be overstated. But there’s a plethora of different policies which may confuse business owners, so it’s critical that company owners understand the types of business insurance available and the ones best suited to their operations. As previously stated, employer’s liability insurance is the only kind of business specific insurance that companies in the UK are required by law to take out. According to the Government, cover must be taken out as soon as a company becomes an employer. The policy must cover a business for at least £5 million and, it should go without saying, come from an authorised insurer. Mandatory, yes, but definitely advantageous as it will pay compensation if an employee is injured or becomes ill as a direct result of the work they do. As if that wasn’t motivation enough, businesses can be fined £2,500 every day they are not properly ensured. To avoid mishaps, businesses can check whether their insurer is authorised by looking at the Financial Conduct Authority register or by contacting the Financial Conduct Authority directly. Perhaps better know as errors and emissions (E&A), professional indemnity insurance shouldn’t be confused with employers’ liability insurance. Instead this protects against negligence claims due to harm resulting from mistakes or failure to perform and can cover compensation claims if a business is sued by a client for making a mistake that leads to financial Finding the Finding the right business insurance isn’t always easy, especially when only one is required by law. So East Midlands Business Link explores the policies available to businesses, what they cover and where they’re best suited. right cover 22-24.qxp_Layout 1 05/06/2020 09:37 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 23 INSURANCE loss. This makes it particularly important for businesses that give advice or provide a professional service to clients, or for businesses that deal with client data and intellectual property. Some professional bodies and regulators require their members to have this kind of insurance, especially surveyors, accountants and architects. Because each industry has its own specific set of concerns, there is no one-size-fits-all approach, so policies are therefore customised on a business-by- business basis. Whether leased or owned, it’s critical for businesses to ensure their workplace and facilities are insured, and property insurance will cover equipment and furniture, but also signage – given how often letters go missing from company signs, it might be worth taking out a policy. Yet theft is hardly the only threat to a company’s workplace with the effects of fire, storm or flood leading to devastating damage and financial loss. Flood damage, however, isn’t typically covered as standard on a property insurance premium, so it’s necessary to check with insurers to price a separate policy. For areas prone to flooding – as much of Yorkshire and Lincolnshire is – more protection and financial safeguards might well be needed. For example, the 2007 floods in East Riding and Hull resulted in property damage of approximately £6.5 billion, while the Leeds Boxing Day floods of 2015 ended up costing the city an estimated £36.8 million. All of which brings us onto business interruption insurance. This type of insurance is often misunderstood by businesses who put their faith in the mistaken belief that they are covered 24 Á © Shutterstock /vinnstock 22-24.qxp_Layout 1 05/06/2020 09:37 Page 224 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk INSURANCE under stand-alone buildings and contents policies should flood, fire or break-ins affect their operations. Although these policies will usually put initial damage right eventually, they don’t make allowances for consequential financial losses that can occur in the long term that can put businesses out of pocket by not an insignificant amount. A more specific and specialised policy is thus required to ensure total coverage should the worst occur. Business interruption insurance covers fire and flood, being the two most common kinds of damages to the workplace. With fresh flood warnings announced as recently as March for Yorkshire, it’s probably worth businesses in high risk areas across our region looking into. Another misconception is that those in low risk areas are immune from flood damage, or that flooding is the result of rainfall and burst riverbanks alone. The most common cause of flooding is, in fact, a burst pipe or damaged water tank that occurs onsite. This kind of cover can include the cost of cleaning up after floodwater has receded, plus the costs of getting a business back up and running. Other possible effects may include the cost of short-term alternative business premises, the replacement of flood damaged stock or business equipment, as well as lost staff wages. All major expenses that a business – particularly an SME – may be unable to fund without a policy of this sort in place. Whatever the specifics, business interruption insurance always includes what’s known in the trade as material damage proviso which basically means it cuts in following a claim made against one’s buildings or contents insurance and covers financial losses that are a direct consequence of a business interruption – i.e. loss of revenue, loss of rental income and additional staff costs. Though not legally required, product liability insurance is essential for any business that manufacture and/or sell goods for reasons that will soon become clear. If a product injures someone or damages their property, the company that sold said product could be liable, even if it didn’t make the product. Should this occur, this kind of insurance would cover a company’s legal fees as well as any compensation they might be required to play. So while not mandatory it is very important for many businesses, particularly SMEs who may be unable to afford to pay the unexpected costs of legal fees and compensation pay outs. There’s a reason why so many businesses put their faith in this kind of insurance, with figures from the Association of British Insurers (ABI) revealing that liability insurers pay out £7.5 million every day. When it comes to protecting profits and looking after staff, it really is better to be safe than sorry. © Shutterstock /WHYFRAME 22-24.qxp_Layout 1 05/06/2020 09:37 Page 3Subscribe now and receive Business Link every month, delivered to your door Delivery Details Name: ............................................................................................ Position: ......................................................................................... Company: ...................................................................................... Address:......................................................................................... ........................................................................................................ Postcode:....................................................................................... Tel:.................................................................................................. 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Minimum term of 12 months / 1 Year 2 Years 3 Years Please charge my: 25.qxp_Layout 1 05/06/2020 09:37 Page 126 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk HEALTH AND SAFETY Preparing for lockdown easing Preparing for lockdown easing 26-29.qxp_Layout 1 05/06/2020 09:39 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 27 HEALTH AND SAFETY © Shutterstock /Y asemin Y urtman Candemir News of lockdown easing may be good news for the economy as a whole, but businesses will be expected to ensure the safety of their staff, specifically when it comes to hygiene. We look at the main culprits and how businesses can prepare themselves. Employers have a responsibility to protect their staff and this is something that may lead to litigious trouble if not taken seriously. With lock down easing, companies coming off furlough may soon find themselves facing a raft of challenges. It is important to remember that Coronavirus is not gone and could strike again if businesses are lax. There are several key points of contamination to keep in mind. Personal hygiene IF COVID-19 has taught us anything it is the importance of personal hygiene. Staff should be encouraged and reminded to wash their hands not only when using the bathroom but also when first entering the business or leaving, including coming to and from lunch breaks. Similarly, any parcels coming in should be washed down before handling. Aside from providing hand sanitiser in restrooms, companies may be liable if they do not provide sanitising gel or other alternatives when sending employees out on jobs where they might not have access to a public restroom. Businesses are also being encouraged to include signage in their restrooms to remind people of the importance of washing their hands for 20 seconds, wiping down taps and sinks and ensuring they clean their hands thoroughly. Since an outbreak could once again close a company down, investing in said signage – even if it is just posters printed out in the 28 Á 26-29.qxp_Layout 1 05/06/2020 09:39 Page 228 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk HEALTH AND SAFETY office – is worth the effort. Staff should also be encouraged to report any problems encountered, including any shortages of appropriate sanitary material. Premises cleaning Given the spread of the virus and the risk of infection, it may be worth increasing and reviewing current cleaning contracts. It’s important to make sure any cleaners coming onto the premises are accredited and doing the job properly, and worth asking your supplier what steps they are taking to mitigate the spread of COVID- 19. As hygiene experts, they should be able, and eager, to show what steps they have in place. It’s also worth highlighting areas of high traffic, especially where guests or clients might enter such as reception, restrooms or waiting rooms, and sanitise those regularly, even wiping down surfaces multiple times a day. Consider more signage to inform guests of what changes they might expect in their usual visit due to COVID-19. Social distancing Social Distancing -Reducing the number of persons in any work area to comply with the 2-metre (6.5 foot) gap recommended by the Public Health Agency. Consider moving desks to provide at least two metres distance, and the same distance should be kept in mind during meetings. Staff should be reminded daily of the importance of social distancing, and managers are encouraged to highlight where appropriate any instances of failure to adhere to this, on the part of employees. Where possible, conference calls are advised to take the place of face to face meetings, and work processes should be redesigned to keep social distancing in mind. It’s important to keep visitors in mind too. Tape on the floor to mark where people should stand when coming to reception or friendly reminders to keep social distance are worth investing in, while chairs in any waiting rooms might want to be subtly moved to promote distance. Delivery drivers may fall into the same category and may now have their own restrictions preventing them from entering a building. Keep this in mind as staff may need to be informed as to where to meet drivers, how to handle any deliveries and what to expect. Individual employers should also take steps to provide signage to remind staff of the need for social distancing. A simple print-out message attached to a wall can suffice, but if possible, more 26-29.qxp_Layout 1 05/06/2020 09:39 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 29 HEALTH AND SAFETY © Shutterstock /eamesBot should be considered. Other concerns… If a business has further requirements of its staff, such as PPE, RPE or other protective equipment, then further care will need to be taken in maintaining and provision of these, including company policy on how to sanitise them between use. It’s also important to remember that staff will need to be alerted to all the above changes in policy, from restrooms to social distancing, meetings to what they should do when developing symptoms. Employers should always update their employees, and it’s worth taking the time to pen an email to all employees upon returning from lock down, just to update them as to the changes they might expect. As our region moves out of lock down, it will be up to each of us to work hard to ensure a second wave doesn’t strike. Stay safe, and make sure everyone entering and working in your premises stays safe as well. 26-29.qxp_Layout 1 05/06/2020 09:39 Page 4Next >