Even for companies with the best profits, poor cash flow (working capital) will effect business performance and weaken resilience. So a downturn event such as COVID-19 (Coronavirus) could spell trouble.
However, there are things to be done:1. Chase payments
Central to managing cash flow are good credit control procedures. Chasing payments can provide immediate cash, as does weekly invoicing.
2. Reduce costs
Cutting costs within the business may bring short and longer term cash flow benefits.
3. Talk to creditors
Suppliers appreciate clarity. Although a little daunting, informal negotiations are often rewarded with creditors agreeing to reduced payments for a time. However, this may not stop interest or charges accruing.
4. Investigate funding
Your type of business, as well as its structure will determine which types of funding you can use to improve cash flow.
5. HMRC Time To Pay (TTP)
With HMRC Time To Pay, outstanding liabilities / arrears relating to Corporation Tax, VAT or PAYE are repaid (normally in 6 to 12 months) after informal negotiations establish a viable re-payment figure and period.
6. Company Voluntary Arrangement (CVA)
A formal insolvency arrangement; all company debt is consolidated into a manageable monthly repayment. A CVA is suitable for companies considered to be viable once they have traded out of their current financial difficulties.
We have a dedicated team who can advise on a measured response to cash flow difficulties or insolvency caused by COVID-19 (Coronavirus) or anything else. Just call 0121 201 1720, it's free and there's no obligation.
Companies House has the following advice if you cannot file your accounts on time due to COVID-19.