Business support and finance specialist Phil Hargreaves gives his insights on the key things that every business should be considering to continue operating in a crisis.
As the Coronavirus (COVID-19) pandemic continues to grow it is vital that business owners start to think about how they need to manage and/or change business strategies in order to mitigate for any impacts which might occur as a result.
Many business owners will have, at some time, completed a Business Plan. The time is right to take this out of the drawer, dust it off, and to see what needs to be done to protect the business from any downturn in sales or impact on cash flows as a direct result of COVID-19.
Look at the potential impacts to cash flow and how, by taking action now, any potential problems can be managed. Here are a few key pointers:
1. Carry out a risk assessment and list your plans to overcome any key issues. For example, are any of your suppliers/supplies likely to be impacted? If the answer is yes – what can do you to sustain your stocks? What does your current inventory look like - do you need to look for new suppliers - do you have contractual obligations to current suppliers? How is this likely to impact on cash?
2. Undertake a thorough review of your cash flow to understand where the pinch points are likely to be. Don’t ignore potential cash issues - by planning now you are more likely to work out a plan which helps to overcome your problems.
3. Consider how you can improve cash flow:
a. Keep a cash flow forecast – update it regularly
b. Review all outgoing payments – delay any non-essential items. Review the frequency of when you pay suppliers – see if you can negotiate extended or more flexible terms
c. Send out invoices in a timely manner and ensure that these are chased promptly. This is money owed to your business – do not be shy in asking for payment, it is estimated that 50,000 SMEs go bust every year due to issues with late payments
4. If you do identify a serious cash flow issue, speak to your bankers, or other funders, immediately. Many of our High St lenders are already rolling out plans to support the SME community with emergency loans and overdrafts – so get in touch sooner rather than later, Banks do not like surprises.
The key is to stay ahead of the game and anticipate problems before they occur – so don’t delay, act now!
Contact our access to finance team for more support.