COVID-19 continues to threaten the survival of many small businesses.
COVID-19 continues to threaten the survival of many small businesses. However, there are proactive steps you could take now, to ease some of the pain you are no doubt feeling while leaving you well-positioned to resume normal operations when crisis conditions ease.
Cashflow is critical
Quite certainly, managing your cashflow as effectively as possible is the most critical task right now. Working through this 16-week cashflow forecast template, may help to provide a clear picture of your cashflow for the next 4 months.
By revising it every 2 -4 weeks, you’ll be able to quickly spot and plan around any liquidity bottlenecks. If your business is in a critical position, i.e. every pound and day counts, then update the forecast every week.
Look for business costs that you can cancel or defer. Speak to suppliers and ask for lower prices or discounted rates for a limited period. Consider signing up to a longer-term agreement to show your commitment to the relationship.
Help from the UK government
A full list of the government support measures is here, highlights include:
- Deferring VAT and self-assessment payments on account
- A job retention scheme (aka ‘furloughing’ staff)
- Self-employed income support scheme
- Support for businesses paying sick pay
Business interruption loan
To help with your liquidity, you might consider taking out an interest-free loan with the Coronavirus business interruption loan scheme. This scheme gives you access to term loans, overdrafts, invoice and asset finance of up to £5 million and for up to 6 years.
The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any fees from your banks.
Apply for a £10,000 cash grant
Businesses that own or operate premises may be eligible for a £10,000 cash grant. If you receive small business rate relief or rural rate relief, then your local authority should already have contacted you about this. Other grants are available for retail, leisure and hospitality businesses.
Chase overdue payments
If you have outstanding invoices, step up your efforts to get this money collected. Few people like chasing customers, so use one of these time-saving email templates as soon as you have issued an invoice.
It’s amazing how just mentioning ‘Statutory Interest’ and other financial penalties can nudge a reluctant creditor to pay up suddenly.
Other payment ideas
Early payment discounts can incentivise prompt payment, boost cashflow and improve your liquidity. They can be used to reward suppliers that are critical to your business, or firms that you know are struggling. Look into ‘pay it forward’ payments for repeat customers as a means of getting cash into the company earlier.
Review how you collect payments and look to automate business processes where possible. Use any downtime to identify potential technology solutions that offer long term benefits for how you manage cashflow.
It’s OK to ask for help
Just keeping the lights on and paying the bills can be incredibly stressful at this time. If you are in financial distress, then the HMRC’s ‘Time to Pay’ scheme could ease the burden you are shouldering by supporting how and when you pay your taxes.
To give yourself the best chance of surviving COVID-19, stay optimistic and focused, be clear about your business goals, have a financial plan in place and don’t take your eyes off that all-important cashflow.