ICAEW launches cashflow guide for finance professionals
16 April 2020: ICAEW has created a guide featuring practical actions finance professionals can take when considering cashflow to support their businesses through the coronavirus crisis.
These difficult and stressful times are putting major strain on the cashflow of millions of businesses. Finance professionals are key in supporting these businesses through the COVID-19 pandemic and beyond, and most will be urgently working through the issues.
To assist with this, ICAEW has put together guidance sharing six practical actions finance professionals may wish to take when considering cashflow. ‘COVID-19: six actions for finance professionals on cashflow’ was created by the ICAEW Business & Management Faculty in association with other Faculties.
Below is a summary of the six actions covered by the guidance. To read the full guide click here.
1) Manage cash outflows
- Raise awareness within your business about the importance of cash. Make it clear how important it is to know when suppliers are anticipating payment and go through creditor schedules regularly.
- Contact your lender and seek forbearance on interest rates, capital repayments and terms of current overdraft where appropriate.
- Communicate regularly with your landlord and critical business suppliers and pay to terms where appropriate.
2) Take professional advice
3) Manage cash inflows
- Be in communication with key or major customers regularly so you keep ahead of their circumstances. Assign clear responsibility within your business for regular communication with each key relationship to preserve the long-term relationship.
- Arrange to collect new sales on order or delivery and seek to collect from customers who are due to pay. Assign actions to staff and check they happen.
- Check the terms of business insurance policy in case it covers pandemics or government ordered closure. Stay in touch with your insurance provider as appropriate.
4) Access government-backed support
The UK Government has released a range of business support measures for UK businesses during the coronavirus pandemic. Consider:
Review the range of government-backed support, including:
- Access funding (80%) for staff who are not active in the business and transferred to the Coronavirus Job Retention Scheme – known as ‘furloughing’.
- Talk to HMRC and request more time to pay your tax liabilities.
- Recover statutory sick pay paid to staff not at work due to the virus where your business is a small and medium-sized business with less than 250 employees.
- Access cash grants where your business is eligible for small business rate relief (the small business grants fund).
- Access cash grants where your business meets criteria within the retail, hospitality and leisure sectors (the retail, hospitality and leisure grant fund).
- Delay and pay your VAT liabilities just before 30 June 2020. (See FAQs on VAT delay).
- Take a 12-month business rates holiday (for eligible nurseries and also retail, hospitality and leisure businesses).
- Access funding from the self-employed income support scheme.
- Delay and pay your self-assessment liabilities just before 31 January 2021.
On 9 April 2020, the Chancellor announced £750m of support for frontline charities across the UK. For more information, click here.
5) Contact your bank and/or finance providers
- Contact your lender and seek forbearance on interest rates, capital repayments and terms of current overdraft.
- If your business is UK-based activity, with annual turnover up to £45m, you may be able to access funding of up to £5m via the Coronavirus Business Interruption Loan Scheme (CBILS).
- If your business is UK-based activity, with annual turnover between £45m and £500m, you may be able to access funding of up to £25m via the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
- A new lending facility from the Bank of England is available to help support liquidity among larger businesses, helping them bridge coronavirus disruption to their cashflows through loans, under the COVID Corporate Financing Facility (CCFF).
6) Update your cashflow forecast
- Refresh your cashflow forecast regularly and reflect government-backed support, business rates holidays, cash grants and loans that you are eligible for.
- Regularly update your cashflow forecast for key assumptions, including the effect of lower sales or delayed or bad debt on your cash position. Make sure you know your cash situation on a basis that makes sense for the nature of your business – this could be daily or could be monthly. You need to know how much cash your business can draw upon, what the position will be under different scenarios and intervals, and the extent of additional finance required.
Note: The guide is intended to be practical and helpful, but because every business is different it shares general guidance only. Businesses should neither act, nor refrain from action, based on the information in this guide and should take appropriate professional advice on the circumstances of the business.
It is important to keep checking the UK Government website (including the dedicated financial support page) and ICAEW’s Coronavirus Hub for updates on a regular basis as new detail on how to access the government-backed support becomes available daily.