In these uncertain times, the cashflow and liquidity needs of a business are paramount.
Watch our latest recorded webcast involving Capify’s CEO and Founder David Goldin, talking on the Festival of Enterprise webinar Cashflow Crisis. Alternative Financing Options to Manage your Cashflow.
Managing cashflow is now a critical priority and an essential part of any business’ survival plan, to help you with this important task we have outlined a range of measures you should consider and government schemes that are available to support your business and employees.
Don’t bury your head in the sand: chase late payments
For any business, chasing up payments from debtors can be time-consuming, even awkward. Burying your head in the sand won’t do you any good, particularly when COVID-19 is impacting your sales. Payment terms should be set out clearly in your contracts, and you shouldn’t be afraid of chasing up late payers.
In uncertain times, incentivise early payment
Many businesses have found success encouraging early payments from customers by offering discounts for paying upfront. This provides a quick cash injection when you need it, as well as rewarding good debtor behaviour with a reduced cost. Alternatively, arrange for payment to be made when goods are delivered.
Review the sources of government support
Since the outbreak began, the UK government has announced a range of measures aimed at supporting businesses through this crisis. These include policies focused on maintaining business liquidity. Details of the Coronavirus Business Interruption Scheme and the Business Bounce Back Loan ,which are designed to keep businesses going, are available online.
Use government support to manage your fixed costs
Government support for businesses battling COVID-19 goes beyond providing loans. The Coronavirus Job Retention Scheme steps in to directly pay 80 per cent of furloughed employees’ wages (up to £2,500 per employee per month). This allows businesses to effectively address some of their fixed costs, without having to resort to laying off staff.
Defer your tax liabilities with HMRC
HMRC have set up a dedicated helpline to speak to businesses and the self-employed to delay their tax bills. You can contact them on 0800 024 1222. They will help with deferring your liabilities, stopping collections and cancelling penalties and interest. HMRC have also offered automatic deferrals of VAT and income tax. You don’t need to apply for these. VAT payments due between 20 March and 30 June 2020 are now deferred until the end of the tax year, Income Tax payments usually due in July 2020 are now due by January 2021.
Your local authority will be in touch about the new grants
The government has announced measures to help businesses who pay rates or claim small business rates relief/rural rate relief. These include grants of £10,000 (All businesses) and £25,000 (if you are in the Leisure, retail and hospitality sector). Businesses in the Leisure, retail and hospitality sector will also get a rates holiday for 2020-21.
Contact your insurance provider
Finally check the terms of your business insurance policy it may cover pandemics or government ordered closure.
Details of the government support measures can be found here