Carl Taylor Senior Consultant

The current COVID-19 crisis has taken the whole world by surprise, and is likely to have a significant impact on businesses over the coming months

Its important to manage cashflow prudently right now to enable businesses to be in the best position to weather the storm.  Here are 10 critical actions you can take now to help manage cashflow both now and over the coming months.

Get up to date with your financialsIn view of potential economic disruption, it’s critical that you know exactly what your position is right now, so its important that all businesses get up to date, accurate management reports so you can assess your cashflow and equity situation right now.

Do an accurate, realistic month by month cashflow forecastThe best way to assess the potential impact of the current disruption on your cashflow is to prepare an accurate, realistic month by month cashflow forecast, at least for the next 6 – 9 months.  Then test different scenarios through the forecast, with different levels of sales to give you an idea of the cashflow implication of different possibilities.  It is impossible to know exactly what is going to happen, but you’ll be far better prepared if you’ve done this.

Chase outstanding debtsNow is a critical window of opportunity to chase all outstanding debtors to chase for payment.  This will help boost cashflow for what may lie ahead, and will also lessen the risk of bad debts later on.

Cut expensesCut all unnecessary expenses and look at reducing excess directors / owners’ drawings – tighten your belt!

Ask suppliers if they can helpAsk suppliers what help they can offer.

Look at financing optionsIn the light of your cashflow projections, look at potential sources of finance now so you can draw on them when you need to – speak to your bank about what they could offer you.  The government are launching a temporary Coronavirus Business Interruption Loan Scheme next week to support business to access bank lending and overdrafts by backing loans to give lenders confidence to lend.

Be prepared to put money in

Be prepared to put money into your business to keep liquid.

Look for the opportunitiesKeep positive and look for the opportunities in the challenge.  Diversify if you need to, to create additional revenue streams – don’t sit and do nothing!

Stop capital investmentHold back on capital investment – you need to conserve cash over the coming months.

Use HMRC time to pay to spread tax liabilities HMRC have set up a dedicated helpline to help spread tax payments for those whose businesses are impacted by COVID-19 situation.   You can find more information on this here.

Last updated: 19/03/2020
View our comprehensive COVID-19 Resource Centre