All of our loans are sourced entirely from institutional capital. Which begs the question: are we now not just like a bank, minus the high-street branch network? The answer is an emphatic “no” for a number of reasons...
8 Ways to Improve Cost Control & Cash Flow
Minimising and/or deferring business costs is critical during periods of reduced business activity.
Accurate monitoring and forecasting of cash flow is also important, particularly, when seeking support from existing or new lenders. In this short blog we take a look at 8 tips that might help a business mitigate costs and improve cash flow:
Check if you have business interruption insurance that covers pandemics and government ordered closure.
It is worthwhile checking to see if your utility provider provides payment holidays or deferrals.
Even if you do not qualify for a business rates holiday or cash grant, you may want to contact your local authority for a payment holiday.
Speak with your landlord to see if there can be a deferral of rent for an agreed period. This is more likely if it’s a larger institutional landlord, however, private landlords may consider assistance if they can secure their own mortgage payment holiday from their bank/lender.
5. Reduction of director salaries/dividends
This might be an option alongside a request to your personal bank regarding a mortgage payment holiday (most lenders are providing a three month mortgage repayment holiday). July 2020 self assessment income tax payments are being deferred until January 2021 which may also assist with flexible drawings.
If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow (or at least a capital repayment holiday). In addition, it might be possible to agree a commercial mortgage payment holiday.
In addition to government support via the Coronavirus Job Retention Scheme you may consider reduced hours and/or salary cuts as options to making redundancies.
8. Cash flow forecasting
Clear visibility of future cashflow is critical and having a robust cashflow forecasting process will also help identify potential cost savings. Sensitivity analysis covering different assumptions for future revenue and costs will identify points where cash balances could become exhausted.
Having this information will also be useful when discussing support options or additional funding requirements with lenders. For example, existing lenders may be more willing to relax covenants or offer capital and interest repayment holidays if there is good transparency on a business’s cashflow position