COVID-19 – Cash flow – When Cash is Definitely King

Over the last few days, obviously we have been having many discussions with clients with regard to the current position and, in some cases, orders and sales have stopped overnight.  Whilst this will obviously hit profitability, more importantly cash flow is slowing up dramatically.

Whilst the Government is putting in place the packages of grants and loans, there are other things that business owners should be considering:

Banks/Finance Houses

Speak to your bank/financiers regarding short term funding which may be an increased % on your invoice financing or larger credit line or a short-term overdraft from your bank.

The banks are also considering holidays on loan repayments.

Finance Leases/Hire Purchase

If you have material hire purchase payments, then we are hearing that 6 month “holidays” for the payments have been agreed.

HMRC – Time to pay

HMRC are agreeing to time to pay arrangements for VAT, Corporation Tax and PAYE/NIC.  The discussions can include deferment or payment in instalments.  The number to call is 0800 0159 559. You will require your reference number for the tax or taxes you are looking to delay payment of.

Landlords

You should be speaking to your landlord to discuss your position with regard to the rent.  Whilst we do not expect them to cancel any rent payments due, they may allow you to pay monthly rather than quarterly in advance.

Suppliers

You should be speaking to suppliers and extending the terms of payment for bigger payments where possible.  It is far better speaking to suppliers than just not paying.  Most people are in the same position.

Employees

This is hopefully a short-term issue and therefore a discussion with your employees regarding reducing hours or sharing hours around the employees with a return to full time working when things pick up could be sensible.

All of the above should be considered at these exceptional times when ‘cash is definitely king’.

Many people have said this is like the recession and I would agree but, in a recession you could market your business harder or offer discounts.  Sadly at this point in time neither of these will make a difference.

Photo by CDC on Unsplash

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.