COVID - Business Finance To Do List 2
After getting organised, we now need to start contacting everyone we make payments too. It is far more preferable to do this quickly (before they become overwhelmed with too little resource) and to do it with agreement, rather than risk poor credit marks (which could affect your business' ability to raise finance for years into the future). In an ideal world you'd have a set of financial projections to send to all these suppliers/financiers, but for most businesses, that will take some time to prepare, so concentrate first on making contact and you can provide any necessary information later.
I'm going to list all your outgoings and how you should handle them. At this stage you need to maximise your cash reserves and stop all outgoings, but with agreement. Your focus should be on being able to pay your staff. Obviously, some of these conversations may go better than others, but have them all now and then see what other funding you need after you've assessed this situation, so you will be in a more informed position when the govt loans/grants go live.
Assume with HMRC you'll have a little leeway. So don't contact them until closer to your due date for PAYE/NIC, VAT, Corporation Tax etc. If that is very soon, ask your accountant to do that for you now to agree a deferral of any due payments. Alternatively, call the HMRC’s dedicated helpline on 0800 0159 559.
Landlord - if you are renting premises (and still need to), contact them immediately and ask for some extra time
Rates/council tax - contact your local authority and explain you are holding back payment until it's all agreed. It is highly unlikely your Local Authority will take court action for non-payment at the moment, so inform them & then cancel your direct debit with them
Utilities, phone, broadband, insurance - open up communication about alternative payment terms, before you cancel any direct debits (or they bounce if you are overdrawn). You do not want them to cut you off/cancel your policy but you need to see if they are open to alternatives.
Banks - speak to your clearing bank and see if you can arrange/extend your agreed overdraft; mortgages/loans - ask for a 3m or 6m payment holiday; credit cards - ask for a payment holiday and lower interest
Finance companies & leasing - as above
Trade suppliers - start with the largest companies first and ask about extending payment terms. Don't do your normal 'payment run'. Take more time each week assessing who are going to pay and how much. More details on the next blog about planning future cashflows.
Consider applying for a fuel card or a credit card to give you 40+ days of cashflow leeway for daily expenditure - although to avoid interest you must pay in full on or before the due date. You need to be very careful in a downturn, especially if you are company director, that you don't trade insolvently and you don't knowingly take on extra credit if you know you will not be able to repay it
Stop any other unnecessary expenditure - stationery, repair bills, restocking, apps/software renewals, licenses - whatever you'd normally pay for on a regular basis, review and see whether you will still need those outgoings
The next blog will be about looking forward and assessing your additional working capital needs based on your revised cashflow projections.