Xero User News - The re-emergence of the economy post-COVID

Now that the economy is slowly opening up in accordance with each area of the UK’s roadmaps, what does that mean for businesses and managing finances?

Positively, the Bank of England is reporting economic prospects as being better than forecast and suggests they could be stronger still due to the successful vaccination programme. However, risks to this outlook do still exist as more COVID variants arise. Speaking recently on BBC Radio 4’s ‘Today’ programme the Governor of the Bank, Andrew Bailey, said “I’m now more positive, but with a large dose of caution.” He went on to imply that with the pandemic now in retreat, output should return to its pre-pandemic level by the end of the year, “That’s good news, but let’s be realistic. It’s not more than getting back to where we were pre-Covid.”

Re-opening Hospitality, Leisure & Tourism 

The UK Hospitality, Leisure and Tourism sector is expecting a strong summer, but what happens in the traditionally quieter winter months? Are businesses encouraging bookings for winter now? The Chancellor announced the extension of the reduced rate VAT scheme until the end of September so business can receive the benefit of this now on deposits. The reduced rate of VAT was introduced to help businesses, although some have passed it on to the consumer which will result in a price rise in the winter months, so bookings made and paid for now will be cheaper.

It is reported that people have saved over £100 billion during the pandemic so how does the re-emerging economy encourage people to start spending again? Whilst many city dwellers will be looking to the countryside for a staycation, there are also huge opportunities for the UK’s towns and cities to entice people back to enjoy the attractions and activities that have been restricted for so long. Key to this will be differentiation and standing out from competitors, becoming a destination where people want to go to and feel safe.

Clear Business Focus 

Many businesses will struggle to re-emerge from this period, and for them, obtaining good business advice as soon as possible will be crucial. 

Those businesses with a clear business plan and strategy may be able to continue with a strategy for growth, but attitudes to risk and opportunity will, in many cases, have been changed by recent events. Business plans may have been revised, but they need to remain flexible, and an easily adaptable forecasting tool such as Fluidly or Fathom could prove invaluable. A good CRM system is also very useful, enabling business owners to plan ahead, understand market trends and focus marketing strategy.

Cash Management 

Business has had to really understand its margins and overhead expenditure more than ever. Cash management has certainly been key, with management of payments, debtors and supplier spend. The pandemic has accelerated the drive towards a cashless society with more online shopping, contactless and direct payments. Ensuring that systems collect these payments efficiently, and cash is received into bank accounts promptly with minimal overhead charge is important, so selecting the right payment provider is key. Consider whether a Direct Debit solution like GoCardless could give greater control over payment collection. 

Summary

To sum up, global events driven by the pandemic have impacted on the operations and plans of many business models. Real-time information is more important than ever, and flexible reporting systems as well as strong financial advice, will make all the difference in emerging from these turbulent times.