The Chancellor has pledged billions of pounds to save businesses from insolvency following the coronavirus pandemic, putting in place an extensive range of emergency measures to alleviate the severe financial impact.
The urgent need of businesses is undeniable, but the sheer practical challenge of implementing these initiatives in a short timescale means payments to businesses and the self-employed cannot be immediate.
Businesses in Northern Ireland and around the UK are still struggling to survive, so what can you do to save your business following the covid-19 outbreak, and where should you start?
Research government assistance for businesses affected by coronavirus
The best place to start is with the government measures to help businesses. Whether you’re an SME, limited company, or a self-employed individual, you may be eligible for one or more of the following support packages:
- Cash grants of up to £25,000
- Wage payment subsidies under the Job Retention Scheme
- Government backed Business Interruption Loans for SMEs and larger businesses
- Covid-19 Corporate Financing Facility
- Three month business rates holiday
- Statutory Sick Pay (SSP) rebates
- Deferment of VAT and self assessment tax payments
- Self-employment Income Support Scheme (SEISS)
- HMRC Time to Pay (TTP) arrangements for tax arrears
Chase up outstanding payments
It’s vital to chase outstanding invoices, particularly in relation to larger corporate clients that are in a better position to survive this crisis. Morrisons has led the way in this respect by immediately paying their small suppliers in mid-March, helping to lessen the impact on their cash flow. If your business is still operating, invoicing clients and customers immediately after work is complete could also alleviate cash flow issues in the coming days and weeks.
Forecast your cash needs
Cash flow forecasting provides a reliable insight into your cash needs, whether on a daily or weekly basis, or six months ahead. It helps you stay in control – you’ll know exactly where your money is going and when payments are due in, which helps you avoid the steep decline into insolvency.
Cut costs
In the light of the covid-19 outbreak and its severe impact on business, eliminating all unnecessary costs should be your next step. This may involve making longer-term decisions regarding your workforce, or simply cancelling unnecessary recurring payments. Businesses can decline very quickly once financial problems occur, so it’s important to be proactive in this respect.
Consider alternative finance
You may be eligible for a Coronavirus Business Interruption Loan, but if not, funding from an alternative lender could help save your business. This type of lending is typically far quicker to access than ‘traditional’ bank loans, and considerably more flexible.
If you run a high value sales ledger, for example, invoice finance would provide you with regular amounts of working capital that could see you through the coronavirus crisis and beyond.
Obtain professional help
Your accountant is likely to be a key figure in helping your business survive in these uncertain times. They can clarify your current financial position, help you forecast cash flow, and offer advice and guidance tailored to your business.
If you don’t already use online accounting software, many packages offer access that allows your accountant to oversee figures and financial information, and make sense of what is going on at an operational level.
When you’re under huge pressure to save your business but don’t necessarily know how, it’s advisable to take a multi-faceted approach. This could include making use of the government support measures as well as taking proactive steps to control cash, so when the economy is re-energised you’re near the forefront of your market.
About the author
Keith Tully is a partner at Real Business Rescue. Keith has more than 25 years’ experience advising business owners on a range of operational and financial issues, including cash flow, funding, and insolvency.
