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Everything you need to know on

Cash flow

Cash is the oxygen that is going to keep your business alive. It’s essential to have a clear plan for managing it, especially when you don’t know what’s around the corner. 

Your first focus should be easing cash flow pressures on your business during this time. We’ve put together some resources to help.

Deferring payments

Your first stop for help improving your cash flow is to consider deferring your tax payments to HMRC. If you have upcoming payments for VAT, Corporation Tax or PAYE, we’ve put together a short guide showing you how to do this.

A lot of businesses are also entitled to a grant payment of £10,000 under the Business Rates Payers Scheme. This amount is more if you’re a hospitality business. Look at holding off your business rates payment while you check with your local authority to see if you are eligible for any of the concessions. Different councils have different procedures to apply and receive it. If you haven’t heard from yours yet, please give them a call.

HMRC payment plan

Funding

There are lots of questions about how you can access funding right now. In summary, our advice is:

  1. Make the most of government support measures and HMRC deferments first
  2. Speak to your bank manager to help them understand your business and your plan so that if you need funding, they are more likely to give it to you. You can talk to them specifically about overdraft facilities, and a Coronavirus Business Interruption Loan Scheme application. Please be prepared for some very detailed information you’ll need to provide. It’s not a fast process.

We’ve looked at each of these recommendations in detail here. We can help you get together the information you need, so you’re in the best possible shape to make an application.

The government has put systems in place to deliver access to loans and grants. In reality, it may take weeks until the cash hits your bank account. If you need a cash injection within the next six weeks, our advice is to seek alternative funding as soon as possible – Swoop is a good option to apply for alternative finance – both CBILS loans and other options. You can use this link to create an account and start a quick search which will match you with suitable funding providers.

How can I get funding?

Approach your landlord

Approach your landlord about a rent holiday or deferment. There have been a lot of businesses that have negotiated with their landlords. These businesses have successfully negotiated a three month rent holiday. Could you? At the very least, see if you can pay your rent monthly, instead of quarterly in advance. 

Your landlord may have received a grant through the Business Rates Payers Scheme mentioned about. Depending on the type of contract that you have with your landlord and what the deal is with rates, a reduction in rent may be passed onto you. It is worth asking them if they have received the grant payment and whether a reduction in your rent will be passed onto you.

Businesses who have negotiated a rent holiday

Check your cash position

Track your cash flow at least weekly – if not daily. We’ve put together this simple cash flow monitoring tool to help you track when you expect to get cash in and when you expect to pay cash out. 

It’s been designed to be used to provide you with clarity of thought in challenging times, through simple assumptions and approximations. It covers a 90-day period only, as it is intended for short-term use.

It deliberately compromises on detail and completeness, to gain speed and simplicity. It’s a framework to gather your thoughts and put the most important parts of your finances into perspective.

Cash flow monitoring tool

Know your numbers

In times of uncertainty, it’s more important than ever to get to grips with the numbers in your business. The good news is that you don’t need to be an accountant to have the key information you need at your fingertips. 

  1. Produce a visual dashboard for your business – the three or so metrics that tell you whether you’re on track. Make sure there’s a balance of leading and lagging indicators on there, and ensure they’re aligned with your strategic objectives. Update and review them every day or week to ensure you’re on track. 
  2. Calculate your break-even point; it’s a good number to know. Ideally, make sure you set targets above break-even. Plan to make a profit, but know where the break-even line is in case things don’t go to plan. 
  3. Increase awareness amongst the team about what each objective means. If things are simple, clear and aligned – good things will happen. If not, it’ll be much harder work to achieve your objectives. Don’t forget, revenue is much easier for someone to affect (and understand) than profit.  
Help me produce a dashboard

Managing your personal finances

If you’re worried about your personal finances throughout this time, our key recommendations are:

  1. Reduce your bills – this could involve cancelling subscriptions you no longer use, switching and saving on your energy bills or finding a better mortgage deal.
  2. Delay your bills – talking to your bank about a temporary payment freeze on loans and credit cards for up to three months or taking a mortgage repayment holiday (this won’t affect your credit score).
  3. Act quickly if you need credit. Unfortunately, the financial impact of COVID-19 has forced lenders to withdraw a number of their products from the market. So if you need to apply for credit, doing it sooner rather than later will help you secure the right product at the right price.

Our financial planning team has put together some other tips in key areas to help your personal finances.

38 Financial Planning Tips

Technology to manage your cash flow

There are so many great apps out there that will streamline your finance function, help you manage your time more efficiently, and do things while you sleep. 

  1. If you’re not using Xero as your accounting package, perhaps it’s time you switched? 
  2. Encourage clients to pay via Direct Debit using GoCardless. 
  3. Make receipt processing easy peasy with ReceiptBank. 
  4. Forecast your cash flow using Float or FUTRLI.

Some good cash flow habits to adopt

  1. Incentivise clients to pay you quicker. If they’re looking for a discount, only give it if they agree to pay you quickly.
  2. If you can, ask for deposits before you start work and look to get paid in instalments throughout the project, rather than leaving a big lump sum at the end. 
  3. Don’t complete the work/deliver the goods until you’ve been paid (keep something back as leverage). 
  4. Pre-chase key invoices and build relationships with the purchase ledger departments or finance managers. Check that they’ve received your invoice and all the information is correct. Ask when it’s going to be paid. Help them understand the importance of that payment to you as a small business. 
  5. Have a written credit control procedure, and stick to it. What do you do if you’ve not received payment? Then what happens after a week, 14 days, or 28 days? Time on the phone is essential here.
  6. Take action with bad debts – agreeing on a payment plan and getting the cash in is better than getting nothing. 
  7. Negotiate extended payment terms with your suppliers where you can. 

How we can help you with your cash flow

  • Get the information together for your applications
  • Forecasting – both for your own planning and for the loan application
  • Dashboard – put together the key metrics you should be following into a dashboard to keep you on track

If there’s anything else you need help with not listed above, please ask, and we’ll find a way.

Help me please

Key resources on cash flow

Please always remember

The resources contained in our Support Hub are intended to help you and your business and are no substitute for professional HR & legal advice. Each business is different and you should get professional advice relating to your specific circumstances. If you’d like to be put in touch with someone, please let us know.

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