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Managing finance and cash flow guide

finance-and-cash-flowFind out how you can start making changes to your finance and cash flow management. We’ve listed the options available, items to consider and top tips for managing cash flow in the short, medium and long term.

One of the principal concerns during the transition from lockdown to “business as (new) normal” is cash flow. As we noted in our how to guide on managing finances throughout the crisis, cash flow is king and managing it has become more important. The recent lockdown period has been especially tough on SMEs, with over two thirds of UK SMEs reporting “significant pressures” on their cash flow following the coronavirus outbreak. 

While resuming operations should give a clearer picture of your finances and some sense of normality to cash flow through the business, it is important to take stock of what your new operations look like, and how this will impact your finances. The British Chamber of Commerce has warned that most businesses have less than three months of cash to survive the crisis and, with the lockdown now approaching this milestone, it’s crucial to take stock and actively assess your financial position to make sure your business can recover strongly.

With gradual easing of lockdown measures already taking place, and a clearer view of when other businesses will be able to resume trading, many business owners are now able to move out of the “survival” or hibernation phase, and make plans for an improved operating environment. However, it is clear this is no return to business as normal and managing finances is arguably more important than ever. To this end, we’ve created a guide to help you get back to business. We’ve listed the options available, items to consider and top tips for managing cash flow in the short, medium and long term. 

Coming out of hibernation – the next few weeks

Coronavirus has already disrupted the delicate balance between sales, creditors, debtors and overhead costs, and it is likely that these relationships will not return to normal as trading resumes. It is therefore essential to keep track of the most important factors that impact your cash flow. 


As your business reopens, do not expect your relationships and pre-existing with creditors, debtors and suppliers to simply fall back into place. As Milstead Langdon note in its helpful guide, the crisis has led suppliers to default on payments and, in sectors such as the retail or hospitality sectors, the impact on cash flow cannot be understated. As such, it’s vital to chase suppliers for payments before these become overdue and raise invoices promptly. 

Similarly, don’t bury your head in the sand regarding your company’s payments – pay invoices as soon as you receive them where possible and forecast future outgoing costs effectively. This will help maintain a healthy working relationship with your creditors and allow for better cost controls, avoiding bills piling up and becoming unmanageable. Ensuring these outgoing costs are accounted for will also keep your cash flow consistent and healthy. 

If you are struggling to manage all payments as well as wider business needs, it may be worth outsourcing this function. This will ensure smooth operations whilst you focus on other aspects of your business, provided you have the financial capacity to do so. 

Managing costs

Forecasting costs is key to managing your cash flow in the critical first weeks back. Many of the regular payments – rent, suppliers and payroll – will have been upended in recent weeks and it is important to keep a close track of these expenses in the return to business, especially given the likely decrease in revenue in the short-term. These creditors, such as suppliers or landlords, may switch to upfront payments, which can place additional pressures on your cash flow situation. Therefore, it is important to conduct a thorough review of your expected revenue and outgoing costs each month, and perhaps move to a weekly forecasting system. 

While this may mean more paperwork, keeping on top of costs and finances in the first weeks of operations is crucial, and will offer a strong foundation to expand and return to operations over the mid to long term. 


Conduct a thorough review of your expenses and overhead costs in the coming weeks and months. Reducing discretionary spending – including pre-planned asset or equipment purchases – will allow for flexibility and headroom with your operations for any unexpected costs, delayed payments or reduced revenue you may experience. 

If you have already committed to large expenditures such as new equipment or technology, it will be worth checking the contracts to see if these can be delayed or avoided. If not, it may be worth taking out a government-backed loan to ensure this expenditure doesn’t derail your cash flow in these important weeks. 

Help is at hand

If your forecasts show you may suffer finance and cash flow issues as your business reopens, many of the government schemes implemented throughout the lockdown remain in place and offer a useful lifeline to help businesses get back on their feet. These include the Business Interruption Loan Scheme, Bounce Back Loans and the Small Business Grant Scheme, offering interest-free loans of varying lengths and size to support business throughout the lockdown and beyond. The Federation of Small Businesses offers a helpful guide to the support available and Business Info Point provides a step-by-step guide to finding and securing help. 

Over the next six months – finance and cash flow planning

As you move to more predictable trading and operations patterns, you will need to make decisions on a number of issues that impact your finance and cash flow. These can fall broadly into the below categories.


As noted in the above section, many of the government schemes are interest-free for the first year. Therefore, it is important to repay these wherever possible within this timeframe. Making monthly payments as part of your ongoing expenses can help to keep these manageable, as well as avoiding interest costs. 

The Coronavirus Job Retention Scheme, which has allowed many employers to keep their staff on payroll, will begin to require employer contributions from the beginning of August. These changes mean the employer will be required to contribute 20 per cent of the furloughed employee’s salary, as well as national insurance contributions. Forecast these into budgeting and ensure current or projected cash flow allows sufficient flexibility to make these payments. Avoiding costly expenditures and investments in this period can allow the headroom needed for unexpected costs like these. 

If these costs look to upset your company’s finances, and your business operations have changed in such a way to mean that not all employees will be required, it may be worth reemploying certain staff on a part-time basis. Alternatively, streamline operations and make certain positions redundant. When doing so, make sure you abide by employment law and all relevant contractual obligations.


Many suppliers may have changed payment, billing or delivery structures to cope with the immediate effect of the lockdown. While working with them to ensure all obligations and payments were met in the short term allowed both parties to continue operations, it may be worth evaluating these relationships now that both businesses have a clearer view of their finances and business operations. However, it remains important to keep control of your cash flow. This includes chasing late payments, paying invoices promptly and perhaps evaluating suppliers to see if other cheaper alternatives have emerged. 


Keeping control of expenses remains important, even as we emerge from the immediate effects of lockdown. The first six months will remain a crucial time to run a tight check on your finances, and it is advisable to defer any large investments or expenditures until you have a clearer view of your financial situation and business operations. Doing so will afford flexibility to deal with unexpected costs and avoid having to rely on more costly loans, with government-backed loan schemes likely to have been scaled back as we exit the immediate aftermath of the crisis.

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