Economic uncertainty continues to challenge businesses across the UK. While the immediate disruption caused by COVID-19 may have passed, rising operating costs, inflation, supply chain pressures, higher borrowing rates, and slower customer payments are still creating serious cash flow challenges for many companies.

The reality is simple: profitable businesses can still fail if cash flow is poorly managed.

The good news is that there are practical steps you can take now to strengthen your financial position, improve resilience, and protect your business against future disruption.

So how can your business survive the uncertainty?

It all depends on the state of your balance sheet and what complications there are in your supply chain, but there are a few things businesses can begin to plan now:

1.Make Use of Available Business Support and Funding

Many UK businesses are still unaware of the financial support, grants, tax reliefs, and funding options available to them.

Depending on your circumstances, support may include:

  • Government-backed business finance schemes
  • Recovery and growth loans
  • R&D tax relief
  • Local authority grants
  • Time to Pay arrangements with HMRC
  • Industry-specific support packages

A4G can help apply for loans. Contact your Principal Adviser on the usual number. 

2. Start forward planning cashflow issues

Cash flow will be the greatest concern for most businesses. Cash may begin to stop flowing but demands for payment continue. You may have little control over debtor payments in the months to come, but you can control your outgoings. Using our cashflow planning tool (which you can download here) you can precisely plan what you are spending on what every month. 

Also have a read of our article on ‘spring cleaning’ your finances which gives you several things to consider like switching utilities, reviewing your direct debits, de-cluttering etc. to reduce your outgoings. 

3. Communicate with your creditors

Although it’s the part that we all fear – talk to your creditors and explain your situation. Transparency is always the best way with your creditors. They want their money back so it’s likely that they will work with you to put together a repayment plan that suits you both, in order to get it. 

It is then essential you stick to your terms and conditions to prevent them potentially issuing a court claim against you.

4. Ensure you are using the best accounts package for your business

The right accounts package is key to preventing cash flow problems. By ‘right’ we mean a software that has the potential to alert you of any problems that are likely to arise, before you find yourself drowning in the middle of it all.

We use Xero, which gives us real-time access to all our numbers, which is the key to being in complete control of your cash flow. The Xero dashboard is a one-stop-shop for all your critical numbers and key performance indicators (KPIs). You can easily see:

  • What your costs are for the month – i.e. your bills
  • What invoices are due for the month and your total income expected
  • Which invoices are overdue
  • An overview of cash in and cash out for each month

Xero, of course, isn’t the only accounts package on offer. There are several factors you might want to consider before you make a choice out of the wide selection on offer today. Take a look at our top three recommendations and our list of pros and cons here.

5. Calculate your real break-even point

The phrase ‘real break-even point’ refers to the level of sales you need to cover your costs and leave enough profit to cover tax and the drawings you need to live on. Conducting a breakeven analysis is vital to:

  • Help set sales targets
  • Identify your required gross profit margins
  • Understand the impact of an increase or decrease in prices
  • Be able to consider whether you need to reduce your drawings

Read more about how to calculate your real break-even point here. 

Economic uncertainty affects every business differently, but preparation always creates more options.

Businesses that actively manage cash flow, monitor performance, and adapt quickly are far more likely to remain stable and grow through challenging periods.

 But you have to plan now. During the financial crisis in 2008, one of our longest standing clients said “well it’s what you make it, isn’t it?”

And he was right. It is what you make it. You can choose to bury your head in the sand or you can look to the future and plan how.

Contact your Principal Adviser or call us on 01474 853 856 for support in reducing the impact Coronavirus has on your cashflow.

 

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