It’s important to organize your cash-flow before claiming for any COVID-19 government grants.
The global pandemic has created havoc among the businesses and the economical states around the globe. Countries across the worlds are adopting new measures and policies in order to save the businesses from sinking with an aim to bring back harmony in the cash flow. The new measures consist of various financial grants which require you to sort your business’s cash flow in order to get a grant.
How Does Cash-Flow Work?
Cash flow refers to how money flows into your business with income and out of your business due to expenditure. To stay profitable, your business needs to generate a positive cash-flow by adding to its cash reserves, allowing it to reinvest in the company, pay out money to stakeholders, or settle future debt payments.
On the contrary, negative cash flow can quickly bring about mounting debts making your business struggle to survive. Thus your company’s bills, supplier costs, wages/salaries and other outgoings should be met on time in order to stay afloat in the market.
How COVID-19 Is Affecting Cash-Flow?
Due to the coronavirus outbreak businesses are rushing towards negative cash flow and having to pay attention to their staff, logistics and business risks in order to keep positive cash flow going. With a view to help the readers, Taj Accountants has come up with tips for small businesses in the UK regarding their cash flow during the COVID-19 outbreak.
As per the government initiative, there are steps taken to minimise the damage to your small business as much as possible. The initiatives aim to keep your company’s flow of cash consistent with necessary aids. There are many short term government funding schemes available (check out our recent blog: Government Coronavirus Measures: A Guide for Small Business Owner) for your business.
In terms of cash flow, you have to take account of your short-term/temporary financial implications for the coronavirus pandemic. You have to focus on the loan covenants and liquidity so that you can create an immediate cash flow forecast and plan accordingly. You also need to pay attention to your financial documents to see if there’s any loopholes to essentials like loans and credits. Contact your local small business accountants to help you with your documentation and financial research. You’ll need to improve your finances and conduct proper management in order to boost your cash flow. Here are some quick tips for your effective cash flow management:
Know Your Financial State: In order to get a grasp on the positive degrees of cash-flow, you need to have a clear view of your finances. Thus, it’s important to spot ways of managing your cash flow going forward. You need to keep up with how much cash you’ll have available at the end of the month. For a start, you can carry out an up-to-date calculation around exactly what working capital your business has at this moment and how much potentially it can have in the future.
Chase Unpaid Invoices: It’s important to acknowledge how much cash is tied up elsewhere in the business. At times like this, the invoices of your clients can make a huge deal in terms of your cash flow. Therefore your business should call for the money you owe from your clients and chase the outstanding invoices as quickly as possible. So start sending out reminders and notices to your clients in order to get your money back. Check our blog for more tips for how to chase the unpaid invoices: Unpaid Invoices: How to Chase Them.
Switch to Electronic Payment System: Due to the virus’s outbreak people are more concerned about the money transition. They are now preferring to pay through electronic softwares and applications instead of checks, and a lot of small businesses in the UK are switching to electronic payment systems. Adopting the system will let your customers make payments early and more quickly without delay.
Adopt Delivery Services: Customers are unable to come to your premises due to the lockdown which is not uplifting your revenue and leading you towards negative cash flow. In this case you can adopt delivery services and get your premise to your customers and keep your money flowing. This will retain your current customers as well as attract new customers.
Reduce Your Costs and Expenditures: Go through your previous expenses and set out your priorities of expenditures. Cut down expenses that are not necessary under your current circumstances. For instance, you can switch your suppliers or cut back on rent to save some cash. You can also negotiate your interest on loans or discard any unnecessary subscriptions. Go through your accounts with your accountant in London and cut down expenses based on your necessities.
Lease Equipment Instead of Buying: Buying any equipment at this moment can shrink your cash flow at this moment. Instead of buying any equipment, you can take them for lease. You can also add the lease costs on your business taxes.
Reduce Your Tax Bill and Get Sorted: You need to make sure any outstanding tax has been paid off to improve the chances of being approved for time to pay arrangements for income tax. Additionally, make sure to keep up on the various tax reliefs and schemes. Contact small business accountants in your area to learn more about taxation and find out loopholes on reducing your taxes. Taj Accountants in East London can provide you with the most convenient taxation solution with its expert team of accountants.
Keep your situation under review: At times like this, you need a system which can give you a real time view of your true financial position and allows you to conduct regular reviews. You can hire specialist small business accounts in London to help with planning or upgrading to accounts, accounting software and give you the greater visibility you need to navigate your way through these difficult economic circumstances.
How Taj Accountants Can Help You:
At Taj Accountants we provide accounts and taxation services, consultancy for starting up new small businesses and advisory services based on the newest trends with modern technological innovations. Our group of experts analyzes your cash flow and intends to pave a smooth and progressive financial road for you. We understand that times are tough and are here to help.
DISCLAIMER: The purpose of the blog is to provide information and insight regarding the situation. The readers must contact experts before making any decisions based on the information. We highly appreciate you to contact Taj Accountants for further assistance.