As Scotland gets set for another three weeks of lockdown what practical measures can businesses take to protect cashflow and ensure they can progress to the recovery stage – whenever that comes. 

Reviewing and putting in place a flexible business plan is an essential first step to ensure the business can tackle the ‘new normal’. “New normal” will be a diminished version of normal business with extra challenging variables.

Key areas to consider:

•  Customer demand - as distancing measures start to ease - retail and hospitality businesses may see much reduced demand whilst manufacturers may see demand soar. Forecasting demand will be the subject of another blog
• Supply chain – speak to your suppliers to work out the operational impacts
• Staff welfare – how easily can your business adapt to distancing in the workplace?

Forensic “order to cash” cycle

The shortest possible journey from order to cash is good business. Do a forensic review of all the processes that turn an order into cash across your business and make changes to improve efficiency and cash retention.

Maximise your cash buffer

• Apply to your bank for CBILS funding - Even if you don’t need a loan facility now, having it approved and ready to go will help you through any unforeseen tight spots.
• Use HMRC - VAT payments until 30 June 2020 have been postponed until next year and HMRC still offers time to pay arrangements for all business taxes
• Maximise tax reliefs - including R&D tax credits, refunds and use of losses. 
• Changing your year end- can accelerate Corporation Tax refunds when using loss relief.
•  Claim everything else - rates reductions, postponement and grants.

Practice “supercharged” cashflow hygiene

• Raise invoices promptly and keep your accounting records real time up to date
• Monitor cashflow against your plan daily – use automated forecasting software that integrates with your accounting system
•  Credit control is key – again use automated software
• Speak to your suppliers and customers so you can help smooth each other’s cashflow
• Tighten controls around non routine and discretionary expenditure

We are learning how to adapt and revive our businesses during a pandemic – new territory for us all.  Don’t hesitate to ask for help from peers, competitors, suppliers, government and advisors.  We all need to keep supporting each other.

Fraser Campbell is a partner and head of family businesses at Campbell Dallas, leading accountants and business advisers in Scotland Email: fraser.campbell@campbelldallas.co.uk

• Read all of our articles relating to COVID-19 here.