Coronavirus (COVID-19) is affecting businesses in a number of different ways. Despite government support, many businesses remain particularly concerned about the impact that the pandemic is having on their cashflow.
However, there are steps that leadership teams can take now to minimise the effect on their cashflow:
1. Plan ahead
The situation is evolving rapidly so it’s important that you continue to have a strong handle on the cashflow of the business at any point in time. Planning ahead and considering potential issues early will enable you to allocate appropriate resources and help you to find a way through all of the uncertainty. Keep updating and flexing your cashflow forecast as new information becomes available and pay particularly close attention to your list of debtors. Our advisory team has provided some guidance on pragmatic actions that you can take to help protect your business.
2. Keep in touch
Stay in contact with your customers to find out how they’re getting on and the factors affecting them to try and anticipate any potential problems. Regular communication should strengthen your relationship with your clients, which is particularly important at a time of financial stress. Let your customers know how your business is adapting in these times and how you are continuing to service their needs.
3. Be clear
Make sure that you are clear and concise in your conversations with customers so there are no miscommunications. Keep up to date with your invoicing, ensuring it’s consistent and in line with expectations, so no one has any surprises. If you’ve delivered on your side of the contract, the default position remains that you should be paid – and paid on time. Of course, delays to payments by your debtors could risk a knock-on effect further along the supply chain, as you may then struggle to pay your own creditors on time.
4. Be fair
The reality is that many businesses are going to face pressures on their cashflows over the coming weeks, so you may want to consider introducing some flexibility when dealing with some of your most trusted clients. If you have a good understanding of your financial position and have spotted potential issues early, you may be able to negotiate a mutually agreeable alternative repayment schedule with some of your debtors.
5. And if you’re not getting anywhere…
If you feel that you can’t come to an agreement with a debtor, it may be time for expert advice. This is exactly why we offer Escalate – an award-winning service that is transforming how businesses tackle late payments, bad debts and other commercial disputes. If you suffer a financial loss because of late or non payment, don’t automatically assume the costs of recovery outweigh the benefits. And the sooner you begin the process, the sooner we can help you get your money back…