While understanding the importance of keeping people safe, most SMEs have become frustrated with the practical and financial consequences of Covid restrictions.
While understanding the importance of keeping people safe, most SMEs have become frustrated with the practical and financial consequences of Covid restrictions. As the return to the office is finally within reach, business leaders now need to contend with the cost and consequences of ending the era of fully remote work.
Returning to the office necessarily involves additional costs for all involved, and now – as government aid in the form of furlough support and the business rates holiday has largely dried up – it's more important than ever for SMEs to prepare for the financial impact of a return to the office. Here's what SME leaders need to know.
It's not plain sailing just yet
Meanwhile, businesses will need to go back to funding the everyday expenses they once factored in, such as paying for meals and client meetings. Fortunately, these costs will be similar to what they were pre-pandemic, so a little bit of reviewing the numbers should produce a reasonable estimate of how much your business can expect to be spending.
Other business expenses such as utility bills will also return to pre-pandemic levels, meaning that they should be relatively straightforward to forecast. However, plenty of complex factors make forecasting a challenge, such as evolving customer preferences, Brexit consequences, and the national economy.
At Equals Money, our research shows that business leaders find forecasting employee salaries and employee expenses the most challenging of all. In both cases, it's important to communicate the business's expectations to employees and give them a chance to ask questions and recommend changes. Employees are likely worried about cash as well, so a frank, two-way discussion is in everybody's best interest.
Making the most of your money
Making the most of technology should be the first step for most businesses when it comes to forecasting. Today, businesses of all sizes have access to world-class software for forecasting expenditure. Many platforms can also automate processes that feed into forecasting, such as expenses, to save time and ensure that no data gets overlooked.
Similarly, maintaining a clear view of cash flow will be essential, and technology is once again the best tool for the job. With modern solutions, businesses can track cash flow in near real-time and benefit from warning when something goes awry.
Cutting fixed expenses will also be important for businesses as they return to the office. For example, some office providers may be willing to offer a discount if your company doesn't use it every day of the week. While fixed expenses may be predictable, they eat into the funds available for unpredictable costs. At a time when the future is unclear, it's essential to maximise the margin for error.
For businesses spending money overseas, getting the best exchange rate is another chance to make every penny pull its weight. Whereas bank transfers come with plenty of fees and inflexible rates, specialist international currency providers can offer better rates – which is especially valuable for recurring payments.
Is the return to the office worth it?
Whether the return to the office is worth the expense is a question that each business needs to consider. Most companies so far have settled on a solution in between the pre-and mid-pandemic approaches, requiring some work in the office and permitting some at home. It may take some work to determine the right balance for your business, so be open with employees and encourage feedback throughout the process.
The return to the office is both a welcome return to normality and a challenge. Fortunately, businesses have shown incredible resilience and adaptability, and I have confidence they can manage the cash flow challenges of returning to the office.