1) Take Advantage of Government Support
There is an unprecedented level of support for businesses impacted by Covid-19 currently being provided by the UK government. The key measures we are seeing assisting our clients at this time are the furlough scheme, the Coronavirus Business Interruption Loan Scheme (CBILS) and the last quarter VAT deferral offer. It is important at this time that firms use these measures to help generate and preserve cash liquidity. Where appropriate all of the major accountancy and advisory firms have teams in place to help businesses access these measures and maximise their benefits.
2) Talk to your Financier
Alongside the government support, most banks and financiers are providing their own individual measures to support their clients. At ABN AMRO we have created a range of solutions to help our clients. We have tried to make these as effective and flexible as possible, so that we can make these work for our individual client requirements and deploy these quickly for those most in need. Whilst there are lots of options available, be careful to make sure you are obtaining the most appropriate funding for your business. It is understandable that in the current circumstances there may be an urgent need for cash, but it is also risky to only focus on the immediate need. Businesses should be considering the longer term impact of taking on more debt and making sure that this can be serviced and repaid in the future to support continued growth.
3) Look at all of your Stakeholders for support
At this time it is important not to place reliance on a single party to assist you. These are unprecedented times and virtually all sectors and businesses are being impacted in some way. Businesses should be talking to all major stakeholders to find sources of help, be this Shareholder support, Directors loans, further PE/investor investment where appropriate and possibly even employee wage deferrals where necessary.
4) Preserve Cash
The phrase “Cash is King” has never been more important than now. Whilst these are challenging times, it is vitally important to manage working capital cycles as effectively as possible. Try to get customers to pay to as normal terms as possible by effective credit control and where possible try to get part payments or smaller regular payments if customers cannot pay the whole balance due. In addition try to delay or spread payments to your suppliers to either mitigate a reduction in customer payments or to preserve your own cash by being able to reduce your working capital cycle. Payment holidays on any loans or asset finance are among the measures being offered by some banks and financiers. Take advantage of these and try to get the best deal you can.
5) Work Together Now more than ever, management teams need to be working together to help their businesses through these challenging times. It’s important that everyone is “in the same boat rowing in the same direction” and that everybody is helping share the problems being faced and working together on the actions needed to find the solutions.