1 July 2021: How to get cash flowing into your business. This guide shares six practical actions finance professionals may wish to consider when considering cashflow to support their businesses through the coronavirus (COVID-19) crisis.

Introduction

Finance professionals are key in supporting their businesses through the Coronavirus (COVID-19) crisis. Most will be urgently working through the issues and helping their businesses respond. The purpose of this guide is to share six practical actions finance professionals may wish to consider when considering cashflow. We realise these are stressful times which have no precedent. Some options may be appropriate for your circumstances, but this may not always be the case. We also know ICAEW members are resourceful, adaptable and innovative in times of crisis. ICAEW’s vision is ‘A world of sustainable economies’ and now is the time when the profession can show leadership in protecting economies when they are at their most vulnerable.

The information in this guide is intended to be practical and helpful in these difficult times, but because every business is different in so many ways, the guide shares general guidance only and you should take appropriate professional advice on the circumstances of the business.

Action 1: Manage cash outflows

Consider:

• Making changes to financial management actions and processes to manage cashflow efficiently.  For more information, see our financial management guide issued by the ICAEW Business & Management Faculty.
• Raising awareness about the importance of cash in your business. Make it clear how important it is to know when suppliers are anticipating payment and go through creditor schedules regularly.
• Contacting your landlord and lenders to seek time to pay, forbearance on interest rates, capital repayments and terms of current overdraft where appropriate.
• Communicating regularly with your landlord and critical business suppliers and pay to terms where appropriate.

For insight on supply chains in the current evolving situation, watch our webinar recording on this topic convened by the ICAEW Business & Management Faculty. 

Action 2: Take professional advice

Consider:

• Talking to your ICAEW Chartered Accountant or business adviser.
• If in England, visit your local growth hub. 
• Reading government advice (UK Government advice can be found here).

Action 3: Manage cash inflow

Consider:

• Making changes to financial management actions and processes to manage cashflow efficiently. For more information, see our financial management guide issued by the ICAEW Business & Management Faculty.
• Raising awareness about the importance of cash in your business. Make it clear how important it is to know when customers are due to and anticipated to pay. Regularly review aged debtor schedules.
• Being in communication with key or major customers on a regular basis so you keep abreast of their circumstances. Assign clear responsibility for review and regular communication with each key relationship with a view to preserving the long-term relationship.
• Arranging to collect new sales on order or delivery and seek to collect from customers who are due to pay. Assign actions to staff and check they happen.
• Checking the terms of business insurance policy in case it covers pandemics or government ordered closure. Stay in touch with your insurance provider as appropriate.

Action 4: Access Government-backed support

Governments across the world have responded to help business during the crisis in ways relevant to their local economies. ICAEW is a member body of IFAC, an organisation comprising more than 175 member and associate bodies in 130 countries and jurisdictions, reaching nearly 3 million professional accountants. IFAC has developed a dedicated web area with essential resources, guidance and advice from local member bodies and other stakeholders.

In the UK, the Government has a range of business support measures for UK businesses.

Consider:

For businesses

Reviewing the range of government-backed support, including:

• Looking at your Business Tax Account on GOV.UK. Here you can keep up to date with your tax liabilities and payments, request refunds or request more time to pay your tax liabilities if needed.
• Understanding HMRC’s approach to tax debts in relation to time to pay arrangements and enforcement. ICAEW’s Tax Faculty has published guidance on negotiating time to pay.
• Checking the latest conditions of the Coronavirus Job Retention Scheme and seeing which employees you can furlough and access a percentage of funding for.
• Recovering statutory sick pay paid to staff not at work due to the virus where your business is a small or medium sized business with fewer than 250 employees.

For the self-employed

• Accessing funding from the self-employed income support scheme (SEISS). Applications for the fifth grant will open in July 2021.
• Delaying and paying your self-assessment liabilities to benefit from an additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022. 

In summary

It is important to keep checking the Government's dedicated financial support page.

Watch ICAEW’s Coronavirus hub for updates on a regular basis as new detail on how to access this support becomes available daily, and to keep up to date on government-backed support sign up for the ICAEW Tax Faculty’s news service here.

Action 5: Contact your bank and/or finance providers

Consider:

• Contacting your lender and seeking forbearance on interest rates, capital repayments and terms of current overdraft.
• Talking to shareholders about further injections or loans.
• Reviewing other financing options outlined in the Business Finance Guide, created by the ICAEW Corporate Finance Faculty provides information on working capital solutions and sources of professional advice. The website also gives insight on managing cash in times of change and uncertainty.

Action 6: Update your cashflow forecast

Consider:

• Refreshing your cashflow forecast on a regular basis. For more insight on how to do this, read our cashflow and forecasting guide and five tips for effective scenario planning issued by the ICAEW Business & Management Faculty, sharing principles to help you adapt your approach for the current crisis.
  
  Also, explore our guide on how to improve your financial modelling issued by the ICAEW Tech Faculty and this Faculty’s good-practice guidance on how to reduce errors in spreadsheets.
  
  Where your cashflow forecast shows you may need to seek additional financing, consider our guide to smarter business plans by the ICAEW Business & Management Faculty.
  
  Also visit the Government website for further information and templates.
• Reflecting government-backed support, business rates holidays, cash grants and loans that you are eligible for, noting the exact timing of the availability of this support remains uncertain and assumptions in cashflow forecasts should be monitored closely.
• Updating your cashflow forecast for key assumptions regularly, including the effect of lower sales or delayed or bad debts on your cash position. Make sure you know your cash situation on a basis that makes sense for the nature of your business – this could be daily or could be monthly. You need to know how much cash your business can draw upon, what the position will be under different scenarios and intervals, and the extent of additional finance required.
  
  For further information, read the following practitioner guide to managing cashflow and for background reading, the ICAEW Library has a collection of articles and documents related to financial forecasting and models, business plans and treasury/cashflow management.
  
  Importantly, if you need professional help with your business plan and/or managing cash flow, talk to your ICAEW Chartered Accountant or business adviser.

ICAEW is working hard to share practical know-how with members in these unprecedented times. If you have additional questions or concerns not covered by current ICAEW guidance, please let us know by emailing the Business team at business@icaew.com.