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Getting in control of your post-lockdown finances

Practical tips for navigating the new normal

The post-coronavirus business market is likely to look very different to the pre-pandemic world we were used to. Strategic priorities will change, customer behaviour and buying habits will evolve and developing a stable income will become an increasingly difficult proposition. In the uncertain times that lie ahead, remaining adequately funded and profitable is going to take plenty of fast thinking and hard work from the businesses that survive the crisis. Chris Findlow, Head of Partnerships at MarketFinance, explains why companies will require a tight grip on their financial management in the post-lockdown business landscape.

The business impact of the pandemic

As businesses across the globe return to some kind of operational trading, it’s important for us all to stop and consider the enormous disruption and financial upheaval that the coronavirus crisis has caused for businesses around the world.

The global impact of COVID-19 has proved to be a massive challenge for the business community, and we’re not out of the woods yet, even with lockdown now being eased. Companies have been faced with the multiple issues of an unplanned shutdown, the difficulties of remote and distanced working and the twin financial pressures of reduced revenue and negative cash flow – and these challenges won’t disappear overnight.

In a post-lockdown business landscape:

  • Strategic plans have been decimated – no-one in the business world was truly prepared for a global pandemic, or the scale of the impact it would cause. Bill Gates may have attempted to warn us back in 2018, but COVID-19 caught the majority of us off guard. Plans that seemed sensible, risk-free and attainable just six months ago now seem like pie in sky. This is leading many businesses to rein in spending, reassess strategic plans and aim for survival rather than growth in the current market.
  • Operational logistics are challenging – the need for social distancing, safe working conditions and non-contact deliveries is making it difficult for businesses that can’t operate solely via remote working. Teams must work in lesser numbers, or on a shift basis, and that means most companies are not operating to full capacity.
  • Revenue and customer sales are an unknown quantity – with a recession already beginning to bite, being able to predict your sales figures and revenue targets is hard work. Will customers still need your services or products? Do they have the money to spend? Can you meet the demand, even if sales do pick up? These are all key worries when looking at the economic model behind your post-coronavirus business.
  • Cash is still in short supply – you may have survived lockdown and a prolonged shutdown of your operations, but working capital is now likely to be scant and your cash flow will be in a precarious position. It’s probable that cash reserves are already being eaten into, and that any additional financial support from the Government will have served more as a short-term stopgap, rather than as a full cure for the longer-term liquidity of the business.

This may sound like a bleak outlook for the future – and there are many hurdles to overcome.  But I strongly and genuinely believe that we can and will overcome the difficulties of coronavirus to build a revived and renewed business landscape.

This is a time for new ideas, new approaches and a strategy that takes into account the changing world in which we find ourselves. However, for any survival plans or strategic thinking to take hold, it’s going to be essential for businesses to have straightforward, easy-to-access funding open to them – so the cash is there to develop, pivot and evolve.

The growing need for additional funding

Revenues may be down, and working capital reduced, but we still have the same operational overheads, the same payroll commitments and the same tax liabilities to take care of. So, what’s needed is a way to fund the business and keep the wheels turning in the short term.

It’s likely that external funding will be needed to fill the cash flow gaps and replenish working capital. But what are the best routes to finance for the most affected businesses?

Negotiating extended overdrafts with your bank is one option, as is exploring fast access to funding such as invoice finance etc. There’s also the option to dip into cash reserves, or to borrow from other more liquid subsidiaries in your group as ways to inject cash into the business. For businesses in the most dire financial situations, however, this simply won’t be enough to refill the money pot. So, where could you go for additional business funding?

Government financial support has been provided, with a raft of funding, loans and government grants being offered, including:

  • Coronavirus Job Retention Scheme (CJRS) – providing wages for furloughed staff
  • Coronavirus Business Interruption Loan Scheme (CBILS) – for loans up to £5million
  • Bounce Back Loan Scheme (BBLS) – for smaller business loans up to £50,000
  • Future Fund Scheme – for convertible loans between £125,000 to £5million to innovative companies
  • Business support grant funding – providing council grants for affected sectors
  • Deferral of VAT payments – to push back imminent VAT payments.

Qualifying for this financial assistance hasn’t been an easy task, and many businesses have reported long waits for the money to come through. With only 40 verified lenders at the start, through the British Business Bank scheme for CBILS, we felt there was a better way to deliver this finance. We’re now proud to say that MarketFinanceis an accredited provider for CBILS and offers businesses the quick and easy access to finance that’s so dearly needed.

A new strategic and financial approach to business

Receiving the funds requested from your lender will serve to keep the business afloat. Then what’s needed is a new strategic outlook and a better way of managing your financial model – so you’re primed and ready for the new business landscape.

A better understanding of your financial reporting will be vital, so you understand in detail what’s going on within your business finances. Getting a better grip on your budget, cash flow, balance sheet and profit and loss reports will help you to see the real backstory behind the business.

Key ways to evolve your financial management will include looking at:

  • Cash flow and revenue forecasting – to give a clearer idea of the future path of your cash position and income, with a focus on forward-looking planning and management.
  • Improved spend management – looking at ways to boost cost-cutting, negotiate better rates with suppliers and reduce the overall cash outflows from the business.
  • Enhanced debt management – giving better control over credit control, aged debt and payment terms, getting you paid quicker and aiding the flow of cash into the business.
  • Reviewing product ranges and pricing – to reaffirm which products/services are actually selling in the new market, if your prices are competitive, and that margins are delivering the revenues you need (keeping you profitable and competitive).
  • Using additional funding wisely – meaning that you only draw down the cash that’s needed for key post-lockdown strategies, and to keep working capital topped up.

We don’t know when (and if) a second wave of the pandemic will hit this winter, so having a clear strategy, sound financial management and significant cash reserves will all be good practice in these unpredictable and untested times.

A spur to reevaluate the future of business

COVID-19 has tested the business world in so many ways – and will continue to do so over the coming months. But there are positives to be taken from our coronavirus experience.

The pandemic has acted as a spur, forcing us to reconsider our goals, reexamine our ethical business position and reevaluate where we want to take our businesses for 2021. The world has changed, and we need to change alongside it – amidst the chaos and loss of life, let’s find a small seed of positivity to feed and nurture in these uncertain times.

By getting in control of your post-lockdown finances, you set the foundations for a more certain and stable future, helping to rebuild your business anew.


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