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Business Trading Measures

Overview

Region: UK Wide

During this difficult time there are a number of practical measures that businesses should seek to employ.
 

Cash Flow Forecasting

  • Critical in these conditions to identify critical receipts and outgoings
  • Ideally 13 weeks forward
  • Your business’ immediate critical cash-flow pinch-point will likely be end of month with rent and payroll outgoings.
  • Your business needs a CFF to gauge the working capital headroom for it to navigate the pinch-point
  • Confirm any needs for short term funding and contact your banking and lending facilities available
  • Consideration of potential changes to the business environment and operations. Talking to your major customers, vendors, and competitors will give you real time information as to what is going on in your ecosystem.
  • Forecasts need to be updated real time for information that becomes apparent as the weeks go by.
  • The real value with rolling cash forecast is in using it as a decision-making tool.

Communicate and work with your Bank(s) and Advisors

  • Businesses should consider approaching their existing bank to explore opportunities to extend existing facilities or if appropriate, re-organise facilities
  • Robust financial management information will be required to assist discussions so ensure this is available before approaching the bank.
  • Engage your available bank and financers to explore options:
    • Requesting a loan principal repayment holiday or reduction in payments
    • Additional or temporary overdraft
    • Emergency additional loan facilities
    • Invoice financing or asset financing

Consider other ways to potentially raise funds

  • Invoice Finance or debt factoring
  • Asset based lending
  • Mortgaging property or refinancing other unencumbered assets
  • Sale of assets and lease back
  • Sale of surplus assets
  • Shareholder / Director to invest funds
  • Third party investment

Focus on debt collection

  • Prioritise larger debts and those with larger customers. These will be better placed to continue payment
  • Can additional cash be collected with additional focus?
  • Is it worth consider offering discounts to customers?
 

Consider inventory management

  • Can some surplus stock be sold off?
  • Perhaps your business needs to invest in further inventory to ensure access to supplies?

Renegotiate supplier terms

  • Seek extended credit terms with suppliers
  • Review vendor payment terms, looking for opportunities to save cash (discounts) or extend payments.

Negotiate a rent holiday or switch from quarterly to monthly rent payment

  • Many landlords will expect this given current circumstances and will be in their interest to ensure ongoing occupancy
  • Ensure they can demonstrate a business case with supporting financial management information.

Focus on cost cutting measures

Seek to eliminate non-essential overheads
Examples:
 
  • Reduce staffing costs (where possible)
  • Seek alternative suppliers
  • Reduce opening hours
  • Focus on more profitable areas of the business

Consider your core labour requirements

  • Options for businesses include:
    • Continue to pay contracted hours and monitor on an ongoing basis
    • Annual leave
    • Unpaid leave
    • Temporary layoffs or short time working
    • Redundancies
  • Please look to further guidance regarding these measures

Consider your key supply chain risks

  • Understand the financial risks of your key trading partners such as customers and suppliers.
  • Will/When are customers able to pay you?
  • Will suppliers be able to continue to supply?
  • Review your order pipeline and consider whether you need to implement cost saving initiatives now

Review any investment or capital plans

  • Are these necessary in the short term?
  • Can any be postponed?

                                    
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