Following the chancellor's latest news of 'significant recessions' and deepening economic chaos, we spoke to Natalie Toms, Breathe's CFO for guidance on how to manage cashflow outside of SME government support during coronavirus.
1. Create a cashflow forecast for the next 6 to 12 months
If you don't already have a cashflow forecast for your household, there's no better time than the present.
So to plan ahead, first look ahead. Good fortune can't reach you if your head's in the sand.
Help your financial providers to look favourably on your requests by evidencing your plans for working through any anticipated hardship. Make it easy for them to lend to you; make the decision clear cut.
2. Talk to your bank, lenders and credit card providers
Speak asap to your bank about an overdraft facility/extension as a direct result of the virus. Even if you don’t need it immediately, it's good to know your options. And if you do, remember to remain assertive and calm. You're not the only one asking and they may not be able to answer immediately.
Many banks allow you to request an overdraft increase online so utilise that if you can. If your online application is rejected, don’t worry, still call the bank or visit as they are under instruction to accommodate.
Ask credit card providers, if you have any, and ask if they can do anything to reduce any interest you are paying or offer any other support short term.
3. Loans and mortgage holidays
For loans and mortgage request a payment holiday. A 3-month holiday is typically offered as standard in the current covid-19 small business climate.
4. Ask for financial help
All financial institutions are instructed to accommodate where they can during - and after - coronavirus.
There's no need to jump through hoops. Explain your situation and how you and your employees are impacted by the virus. At the very least, they can offer some breathing space by adding the missed payments to the remaining balance so you can manage your cashflow.
6. Check with insurers
If you are not travelling on business, talk to insurance companies about whether you can downgrade your vehicle insurance to non-business use short term. If you have several vehicles, consider if you really need them all on the road while you are home based.
7. Cancel unnecessary subscriptions
Cut all non-committed spend – sounds obvious but look at all those little app subscriptions and paypal transactions that soon add up each month.
8. Notify annual commitments
Give notice on any annual commitments now so that you know they are sorted and wont renew automatically when you don’t want them to.
9. Reduce your data plan
Speak to mobile phone company about reducing your data plan – you are at home use WIFI there for now. Don’t pay twice.
10. Key supplier payment plan
In small business, call key suppliers and try to negotiate a payment plan rather than pay bill all at once to manage cash – they will want to get paid something over nothing. If they pursue you for the full amount and your business fails they get nothing so it is in their interest to engage with the discussion.
11. Check in with your customers
Call your customers and check they are ok to pay you. Consider offering a discount incentive for them to pay ahead of terms if they are able and it will help your cashflow. Or carry forward a credit on their account rather than offer a refund.
If they are in the same boat and tight on cash, engage in a conversation about a payment plan now – they will appreciate it and the aim is to keep cash flowing through as many businesses as possible. If they go down, you get nothing so worth finding a way.
And remember, what goes around comes around. If you are the person who offers help you will be the one they want to not let down.