Last week I tried to set up a payment method with a vendor we use for reporting. Their billing provider wanted us to connect a bank account, which is reasonable, except that the details it asked for are simply not things a Swedish bank gives you. Then it would not let me finish creating the account at all until I picked which US state we operate from.
We are in Gothenburg. There is no box for that. I picked Alabama, which is alphabetically first and otherwise has nothing to do with us, and then I wrote to the vendor and asked them to put us back on card payments, because this was not going to work.
I thought about that this morning, sitting in front of a different form.
What I was actually applying for
We want to defer payment of employer contributions, withheld income tax, and VAT. As many months as we can reasonably get, for as long as we can reasonably get. That sentence took me about ten seconds to write in an email. Getting it into the application took considerably longer, and I did not finish it.
The form asks for tax type, accounting period, amount, and due date. Tax type I can do. The other three assume I know what is going to happen.
I do not. I do not know how many clients pause. I do not know how quickly. I do not know whether we are talking about six weeks of this or something else entirely. The honest answer to “amount” is a range so wide it is not an answer.
So what do you put in the box? Do you state the months ahead, which you cannot know, or the months behind, which you can actually evidence?
I did not resolve it. I sent the half-finished thing to our accountants, asked them to complete it, and asked whether it could go in today.
Why today, specifically
Not because I think our numbers are right. They are probably not.
I sent it today because I am fairly confident that a very large number of companies are about to file exactly this application, and whoever files late gets processed late.
That is the whole of it. There is not much in this situation I control. I do not control demand. I do not control how long it runs. I do not control what other companies do with their payment terms, which is going to matter to us a great deal over the next few months. But I control when I press submit, and position in a queue is decided by that and not by how well-argued the application is.
I find this genuinely uncomfortable, because my instinct is to understand something before I act on it. “Let us wait until we know more” is a sentence I reach for easily, and it has the enormous advantage of sounding responsible. In a week like this one it is mostly a way of standing further back in the line.
The assumption inside the form
What struck me while I was stuck on those fields is that relief schemes get designed by people who assume the applicant knows their own numbers. Which we do, normally. We run a rolling forecast. I know what we invoice and what payroll costs. The form is sensibly built for a company smoothing out a dip it can already see.
But nobody is applying for this in order to smooth out a dip they can see. They are applying because they cannot see. So the administrative bar is highest at exactly the moment uncertainty is greatest, which is a fairly perverse piece of design (and probably nobody’s fault - these forms were not written for a week like this one).
What I settled on was to apply against months that have already closed, where the amounts are real. Those figures are true. They are not necessarily the figures we are going to need, but they can be evidenced, and an application that is in and needs adjusting is a better position than an application that is correct and not in.
I may be wrong about that. If someone reading this has done it the other way and been told it was fine, I would like to know.
What deferral is and is not
It is not money. It is money moved forward, and it comes back, and it tends to come back around the same time as everything else comes back. I am fully aware that we are building a hump for ourselves somewhere later this year.
The trade is that liquidity now and liquidity later are not the same product. Keeping room to manoeuvre over the next few months is worth paying for, even at a cost further out. That is the judgement, and I think it is the right one today. Ask me in six months.
What I am not going to do is describe this as a plan. It is a guess made early rather than late, and the only quality it has is timing.
The thing I am actually watching
The deferral buys weeks. It does not fix anything. What decides how this goes for us is which clients pause and which do not, and I would rather have a view on that before they call me than after.
So the next thing on my list is to go down the client list and sort it - not to do anything dramatic with it, just to have an opinion. Some accounts will go quiet immediately because their own revenue has stopped. Some will cut discretionary spend and keep the work that is closest to sales. A few will spend more, because they always do when things move. I want to know which is which while it is still my guess and not yet their email.
The second thing is to look at every other payment we make with the same filter: what can move, what cannot, and what requires somebody else to process something on our behalf. That last category is the slow one, and it is the one I want started first - for the same reason I filed this morning.
Regarding the form itself - if you run something small and you sat with one of these today, how did you handle the amounts? Forwards or backwards? I suspect I am not the only one who guessed.