Responding to Coronavirus - unlocking cash from your balance sheet

The uncertainty of the current situation surrounding coronavirus (COVID-19) is affecting businesses in a number of different ways. Despite the support offered by the Chancellor in last week’s Budget, many SMEs remain particularly concerned about the impact that the pandemic is having on their cash-flow.  

With a significant liquidity squeeze a very real prospect for businesses across many sectors of the economy, there are steps that leadership teams can take now to bolster their balance sheets and protect their cashflow:

Plan ahead

The situation is evolving rapidly so it’s important that you continue to have a good idea of where you stand amid all of the uncertainty.  

Keep updating your cash-flow forecast as new information becomes available and pay particularly close attention to your list of debtors.

Keep in touch

Stay in contact with your debtors to find out how they’re getting on and to anticipate any potential problems. Regular communication can also help bolster your relationship with your clients, which is particularly important at a time of financial stress.  

Our experience suggests that the old adage of ‘a stitch in time saving nine’ is particularly relevant when it comes to debtors, as a tricky conversation early on can prevent a potential issue from snowballing into something much worse.

Be firm

Make sure that you’re very clear in your conversations with debtors. If you’ve delivered on your side of the contract, the default position remains that you should be paid – and paid on time.

Cash is king in the current economic climate, so try to resist the temptation of writing off (or waiting for) what you’re owed.  It’s also worth remembering that delays to payments by your debtors could risk a knock-on effect further along the supply chain, as you may then struggle to pay your own creditors on time. 

Be fair

The reality is that many businesses are going to face pressures on their cash-flows over the coming weeks, so consider introducing some flexibility when dealing with some of your most trusted clients. 

If you have a good understanding of your financial position and have spotted potential issues early, you may be able to agree an alternative repayment schedule with some of your debtors.  

And if you're not getting anywhere...

If you feel that you can’t come to an agreement with a debtor, it may be time for expert advice. This is exactly why Escalate was created. If you suffer a financial loss because of late or non payment, don’t automatically assume the costs of recovery outweigh the benefits.

Escalate are already helping SMEs to recover £100 million that would have previously been written off, with a simple sign-up process, no up-front costs and a fee only payable if you get your money back. 

Click here to find out more about our Escalate service.