All the indicators suggest that the economic recovery from Covid-19 will be a gradual and slow one. Many SMEs may be struggling to make ends meet already, so what can you do to manage your cash flow effectively to help both now, and in the longer term?
1. Review, revise, react, repeat
Now is not the time to bury your head in the sand or put off making decisions.
Review your forecasting – check the costs you are expecting and the money that should be coming in.
Revise your forecasts based on any changes that have happened since you last reviewed this.
Repeat this regularly – every week if you have to, in order to stay on top of things.
2. Ask for help early
There are a number of government initiatives in the form of grants and loans, business rate relief and other schemes, such as HMRC’s ‘Time to Pay’ initiative if you’re struggling with your bills.
But the key is to ask for help early – there may be a delay in getting payments, or you may need to fill out extra paperwork that will all add time pressures. Don’t wait until the wolf is at the door before you get the support you need.
3. Tackle the ‘to do’ list
If you already know there are things you can do to help your finances, prioritise and get them done. Chase up any money you are owed, implement the difficult decisions you’ve been putting off and get those plans made. You need to balance the demands of the here and now, with the actions that will benefit you in the future.
4. Be radical if you need to be
Covid-19 has caused the most major disruption most businesses will ever have seen, and the effects will be considerable. So this may mean you have to think about larger-scale change too.
Many SMEs are now considering whether they need offices at all, as remote working proves to be effective and cost-saving for them. Others may be looking to move sales online only, or the opposite – focusing more on their local market exclusively.
Maybe you feel the future of your business is in an entirely different direction and the last few months have provided proof of concept for you.
If you’re making small or large changes, be clear in what you are trying to achieve and have a sound financial plan to make it work.
5. Share the love
If you’re finding things difficult as we get to grips with life during Covid-19 recovery, you won’t be the only one.
You can reward loyalty, show your support for others, but also avoid disruption to your supply chain and help your cash flow, so consider how you might be able to help your customers and suppliers.
To ensure bills are paid on time you could consider offering small discounts for prompt, or even advance payment. Similarly, your suppliers may extend you the same courtesy if you ask.
Customers may even be happy to pay up-front for future products or services for a small discount, or even switch to paying you by Direct Debit so you have more dependable cash flow.
See our article here about the other benefits of taking Direct Debit payments.