Businesses hit by the coronavirus shutdown need to take urgent action to understand their cashflow situation and begin to delay and cut overheads to survive.

That is the advice of Richard Andrew, partner at accountants and business consultancy firm Armstrong Watson.

Last night Prime Minister Boris Johnson urged the majority of businesses to close as part of nationwide lockdown to halt the spread of the virus.

Richard, who is also Armstrong Watson's head of accountancy, said although the Government had announced a raft of measures to support businesses in recent days, the exact way these would work was not yet clear.

“The challenge for us as advisers is that a lot of those details are pretty sketchy,” he said.

“We have to focus on decisions we can take now.

“Ordinarily for accountants and business, legislation is changed and there is plenty of time to understand the detail.

"We are in an extremely different situation here.”

However, there were a number of measures that business owners could take right now, he said.

“First they should be doing things like looking at 12 or 13 week cashflow,” he said.

“How long can they currently last?

"What costs have you got going out and what are the unknowns about your income.

"Understand the rate of cash going out of your business.

“That gives you a focal point then to understand your overheads.”

This then allowed businesses to begin looking at what overheads they could begin to cut.

“Perhaps you have got some debt or your personal mortgage that you are paying from your business account - or indirectly - then you can start looking at payment holidays.

“You can get in touch with your lenders to talk about that.”

Business could also speak with their creditors about coming to arrangement on repayments.

“Most businesses will have a sensible discussion with you,” he said.

“Normally you can come to some kind of compromise.”

The Government has already announced that VAT payments for business have been deferred.

Richard said it was possible to contact HMRC to use their Time to Pay service to cover Pay As You Earn tax bills and National Insurance over a longer period in instalments.

“The initial feedback we are getting is that HMRC are being very flexible,” he said.

In recent days, the Government has announced a series of measures to help businesses.

This includes a new Coronavirus Business Interruption Loan Scheme, which will enable businesses to apply for a loan of up to £5 million, with the Government covering up to 80 per cent of any losses with no fees.

Businesses can access the first six months interest free with the Government covering the first six months of interest payments.

The Government says the smallest businesses, that are eligible for small business rate relief or rural rate relief, will be provided with a £10,000 grant via their local authorities.

A £25,000 grant will also be provided to retail, hospitality and leisure businesses operating from smaller premises which have a rateable value between £15,000 and £51,000.

It has also said it will cover 80 per cent of the salaries of those who are unable to work up to a maximum of £2500 a month.

However, Richard said much of the detail of these schemes was yet to be seen.

“As things stand there isn’t anything you can do on this,” he said.

“The £10,000 is meant to be automatic, but we haven’t seen it coming.

“The £25,000 you have to apply for, but we don’t know how to apply.

“It will come but we don’t know when.”

He said for businesses to apply for the salary support, they were going to be able to upload information to a HMRC portal, which was not ready yet.

At the same time, the Government had said it would cover the wages of employees on “furlough”.

However, Richard said it needed to be made clear whether this included those on reduced hours or only those sent home.

The Government backed loans were currently being administered by local high street banks, Richard said.

However, their was a question over whether hard hit businesses would be making problems for themselves in the future if they could not pay the loans back.

Richard said it was also unclear how many businesses would be judged as fit to take out a loan.

“Can lenders say it is a viable business proposition when you don’t actually know when this is going to end?” he said.