Amongst the various financing and cash injections available; The Coronavirus Business Interruption Loan Scheme (CBILS), The Bounce Back Loan (BBL), Business Rate Grants
Etc. We look at other key factors besides loans and grants to help support and enhance company cashflow.
Drilling down on all variable costs incurred tends to be a more effective way of reducing cash outflows quicker as compared to reducing fixed costs.
Where available, converting fixed costs to variable costs whilst maintaining the core of the business –such as contract manufacturing, transportation fleet leasing, and third-party warehousing.
Selling assets and then leasing them back is one way to raise emergency cash.
Although, for most businesses this is not something that can be reviewed and agreed overnight with cash received imminently, it could be vastly important to the cash flow over the long-term depending on how long both the demand and supply chains continue to be disrupted by COVID-19 (You can also expense the lease costs on your business taxes.)
Insurance – Business Interruption.
Everyone with a business insurance policy (prior to COVID-19) should review and understand what they are protected and covered by in terms of business interruption.
Normally, insurance policies will cover losses as a result of disruptions to suppliers or customer based issues.
Although, due to the losses incurred by insurers due to the SARS epidemic some insurers have specifically excluded the coverage of company losses resulting from epidemics and pandemics.
Consider what is truly necessary for the immediate future, can any capital investments already planned and agreed be postponed until normal business resumes? As working life has changed dramatically over the previous months, perhaps previously discussed capital investments should be reconsidered? Extending on the point of dramatic changes to working life, what capital investments should be prepared and ready for the business rebound creating competitive advantage.
Even if your business isn’t in one of the sectors given no confirmed dates to open its doors again, there may be limitations on continuing what was the main revenue stream.
Consider ways which can temporarily run alongside or perhaps even one day replace what was the main revenue stream, which has been demonstrated by Louis Vuitton owner LVMH as they will use their perfume production lines to start making hand sanitiser.
VAT registered businesses that have a VAT payment due between 20 March 2020 and 30 June 2020 are able to defer paying their VAT liabilities during this period.
The liability must be paid to HMRC on or before 31 March 2021 and HMRC will not charge interest or penalties.
No application is required to defer VAT payments however, VAT returns should still be submitted to HMRC on time.
Businesses will simply not pay the VAT liability due in the deferral period.