Our team of experts are working hard to help businesses who may be feeling the impact of the coronavirus, and as a result, we have put together some useful guidance on how to navigate your way through the current economic uncertainty.
Remember cash is king
We are told to expect the pandemic to be through the worst within 12 weeks, companies therefore need to change their cash flow management processes to assess and deal with the challenging times. We recommend you think about the level of cashflow and reserves in your business, and outline the various scenarios (best case, worst case, and something in the middle). Determining how exposed you are is crucial. Once you have done that, you can start to take steps to reduce that exposure where possible. Daily forecasting and integrating short- and medium-term forecasts should provide some breathing space as well as a clearer picture.
Review your business risks
Review your liquidity, funds in reserve and demand side risk, supply chain risk and your workforce mobility.
Speak to your lenders
We encourage you to have open and honest conversations with your debt providers in relation to the potential impact of coronavirus. We too have been speaking with the banks, and from our discussions we are seeing that lenders are very much prepared to help existing clients, certainly in the form of repayment holidays for loans, asset finance and mortgages. Address what the changes brought about by coronavirus mean to your business, its trading performance and liquidity. The sooner you initiate discussions the more chance there is of getting the flexibility you may need.
The Bank of England has slashed the base rate to its lowest ever rate in a further emergency response to the coronavirus pandemic, reducing it from 0.25% to 0.1%.
We have produced a blog providing further details of how the banks are supporting businesses through these challenging times – click here to read.
To raise finance you will need some reliable and realistic cash flows. If you need help preparing these we can help – get in touch now as its best to be prepared and not leave it until the point where you are desperate for cash.
Check your supply chain
Outline the extent and likely duration of any disruption to your supply chain, and contemplate what measures you need to take to account for this.
Assess your working capital model
Conduct an immediate assessment in order to minimise disruption and maximise working capital:
– Evaluate means of accelerating payments owed
– Consider the deferral of payments to senior employees of the business – shareholder dividends, directors and senior employees bonuses
– Cut non-essential expenditure – focus on preserving your cash
– Should it be necessary, consider prioritising payments to suppliers
– Potentially defer any one-off projects which are due to start
Consider all the finance options
Other sources of temporary financing include deferral of monies due to HMRC through a ‘time to pay’ arrangement (click here to read our recent blog on this topic, providing further details). Grants, loans and all other finance options should also be considered – see our blog here which addresses all the available options under the new Government announcements.
Some businesses have seen their customer base almost vanish overnight. However, some have been able to think creatively in order to maintain part, if not all, of their business, so for example, some restaurants have had to switch to delivery services following Government advice to social distance. Thinking of new ways to get immediate cash to allow business continuity will hopefully help in the short term.
Our team have been working with our clients to actively provide support at this most difficult of times, talking about all of the issues discussed in this guide and helping address clients’ specific situations.
If you would like some help and advice, please don’t hesitate to contact a member of the PM+M team on 01254 679131 or your usual direct dial details for the team member who looks after you.
This information is correct as of 20 March 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.