How to manage your business’s cash flow during the coronavirus pandemic

As fashion indies attempt to operate in the midst of a UK-wide lockdown, many have no more revenue flowing in – meaning there’s no access to essential cash to pay staff and bills. No one knows when they’ll be able to re-open their stores or if people will want to buy the SS20 collections they bought when the world was living in a different mindset.

For this reason, all businesses are being urged to put tight controls on their spending to ensure they’re still operational when retailers are allowed to re-open. So, how can you manage your cash flow in these turbulent times? Rick Smith, managing director of Forbes Burton, offers some sound advice…

What can retailers do now to manage their cash now?  

Cash flow is the lifeblood of any business so it’s important to have accurate figures. Business owners should cross-check their data between their balance sheets and bank statements to make sure that everything adds up correctly. 

We are all in unprecedented times and forecasting is going to be tough but it’s paramount that the positive and negative options are tabled and a cash flow forecast applied.

Are there any temporary measures they could take to cut spending? 

All retail businesses should take advantage of the government assistance packages where they can. It’s certainly best to make use of the help while it’s available, ensuring that you’re protecting your future. We don’t know how long this economic shock will last, so we have to prepare for the long term. 

Which essential bills should they focus on paying? Can businesses tell suppliers that they can’t pay now but can when cash flow improves? 

If possible, businesses should mothball the operation by deferring talks with landlords/suppliers/creditors. It’s important to remember that we’re all in the same boat, so it’s more likely than ever that you’ll be able to set back payment dates. 

In terms of which bills you should prioritise, it’ll vary between businesses. With a freeze on business rates and VAT, you won’t have to worry about those. Pay off the bills that will keep your business afloat for longer. 

Mitigate the risk put upon your business by putting a plan in place ahead of time.

In these unprecedented times, should the worst happen, you will be working with a formulated strategy, devised ahead of time to withstand sudden shocks to your cash flow. It’s difficult to stress just how critical thorough planning could be to your business’s survival. 

It is more important than ever to ensure your company is in the best financial position possible. With almost daily announcements from the government about funding and support available to help business deal with current challenges, it is important to ensure that all available options are quickly explored and assessed, particularly when the very survival of the business might be on the line.

It is impossible to control what is happening within the wider environment, but you can control your actions and how you position your company to be able to withstand whatever the future may hold.

Are the government’s new loan packages a good idea for struggling businesses? How quickly will businesses be able to get the money? 

Business interruption loans are a needs must situation with no set-up fees and 12-month’s free interest. If you think you need this loan, don’t wait – use it! If you’re applying for a bank loan, you could be able to access the money immediately. If it’s a government loan, it’ll be a wait of at least a couple of weeks. We simply aren’t sure yet. 

Forbes Burton specialises in guiding businesses through a range of financial hazards and has been aiding firms for 30 years.