4 Tips to Help Businesses Rebuild After Covid-19

Hundreds of thousands of small businesses across the UK have been worried about their finances during the ongoing coronavirus crisis. The sudden and sharp income shock that many have had to endure has left huge numbers of businesses on the brink of insolvency, and as government support continues to be withdrawn, it’s predicted that up to half a million UK firms are at risk of collapse. 

While the situation has been devastating and helplines have been ringing off the hook with queries from business owners and company directors, thankfully, there’s now light at the end of the tunnel. With the coronavirus vaccine now being made available in the UK, there is a hope that things will soon start to return to normal and rebuilding, rather than survival, will become the priority for business owners across the UK. 

With that in mind, here are a few tips to help you hit the ground running once the restrictions have been lifted and return your business to pre-pandemic profitability.

1. Focus on cash flow

Your priority should be to get cash flowing back into the business. Without money to pay suppliers, landlords, commercial lenders and HMRC, your business will be able to make a stuttering start at best and the threat of insolvency will remain. 

There are several things you can do to boost your working capital quickly. The government’s Bounce Back Loan Scheme remains open for applications until 31st January 2021. That could provide you with fast access to affordable funding, with no repayments needing to be made for the first year. Sending invoices to customers quickly and accurately and with clear terms and conditions will help to reduce payment delays. You should also make chasing late or non-payments a priority. The longer a debt remains unpaid, the more difficult it becomes to collect, so make follow-up calls promptly and be prepared to take more serious action as soon as it becomes necessary.

Cutting costs also has an important part to play in improving cash flow. Keeping stock levels low, only purchasing items that are business-critical and paying in instalments rather than making full payments upfront will help to keep more cash in the business.

2. Explore your alternative finance options

The Bounce Back Loan could be an effective way to improve your cash flow, but the government’s support package is certainly not the only form of funding that’s available. Commercial lenders are still open for business, and even if your financials are looking less than healthy, there are still some funding options that could be available to you. 

For example, invoice finance is a fast and scalable form of funding that businesses across a broad range of industries can use. As long as you send invoices to business customers, invoice finance could allow you to release up to 95% of the money tied up in the invoice within just 24 hours of it being sent to a customer. One of the key benefits of invoice finance is that you don’t need a perfect credit record to qualify, as it’s the creditworthiness of your customers that’s important.

A merchant cash advance is another funding option, this time for businesses that sell directly to private customers. In this case, the lender provides the business with an agreed-upon percentage of its future credit card and/or debit card sales. Repayment is then taken as a proportion of your revenue, making it a fast and effective funding solution for SMEs that have a good volume of card transactions every month but do not have many assets. 

3. Adapt to the changing trading environment

Coronavirus has forced many businesses to change the way they operate to survive, and that is likely to continue once the ‘new normal’ has been established. Companies should take the time to analyse how consumer behaviour in their industry has changed and adapt their products or services to reflect that. 

A common example of this in action is retailers that only sold through physical stores pre-Covid setting up a website or other marketplace to sell their products online. Similarly, many bars and restaurants have offered takeaway and food delivery services to keep trading while the restrictions have been in place. Making this pivot will take time and effort to implement; however, it could set the business up to survive and thrive in the future.

4. Get professional advice 

While keeping your costs down will help you boost your cash flow while you rebuild, sometimes there’s no substitute for professional advice. If you have a particular concern in your business, for example, if your IT systems need upgrading or you lack timely financial information, spending money now on professional advice can help you to make significant savings later on. 

The same can be said for professional insolvency advice. If your business has experienced a dramatic decline and you fear that it may be insolvent, contacting a licensed insolvency practitioner will give you a clear understanding of your options, from negotiating a formal debt repayment plan with your creditors to closing your business down in the most appropriate way. 

As Tony Smith, the director of Company Debt, explains: “While the government initiatives can provide some much-needed relief, it will not be enough to sustain every business that’s struggling. If you fear that you may have to close your business or want to try everything you can to save it, there are options available to you. It’s worth seeking professional advice to give your business the very best chance of being profitable once again.”