18 March, 2020 in Industry News

COVID-19: Managing Cash Flow at times of uncertainty

At this time of uncertainty, we will continue to assist our clients in whatever way possible so that they can continue to trade during this period of disruption.

As part of the above, we have prepared some high-level advices in relation to cash flow management.We have also prepared summaries of the recent announcements by the Government in respect measures designed to support businesses and also a summary on employee layoffs, short time working and redundancy.

The key point to emphasise during this period of uncertainty is that planning, communication and acting fast is absolutely key to managing business risk.

As ever, if you wish to discuss, please contact a member of our team and we will be happy to discuss further.


Given the critical nature of the impact on businesses currently, all companies should immediately develop a cash flow management plan as part of their overall business risk and continuity plans.

Each business will be in a different position, some of the key planning points you may wish to consider are as follows:

  1. Consider your core labour requirements
  • Consider pipeline sales, contracts and workflow and consider if you should:
    • Reduce contract labour and re-distribute work to your permanent workforce
    • Encourage employees to take available annual leave
    • Consider short time working
    • Consider offering voluntary, or even involuntary, leave without pay to preserve cash.
    • If necessary, consider redundancies.
  • We have provided more detail around employer and employee rights within the above-mentioned article.
  1. Prepare financial projections and carry-out scenario/sensitised analysis
  • Understand key cash flow risks and pressure points and consider the impact of this disruption on your business.
  • Assess short-term cash flow and confirm the extent of any peak funding requirement (quantum and timing).
  • Assess the above requirement relative to your banking and other lending facilities available.
  1. Communicate and work with your Bank(s) and Advisors in respect of the above
  • All businesses should actively engage with financing partners to ensure your available lines of credit remain available and to explore new or additional options should you require them.

  • If necessary, the following are options:
    • Requesting a loan principal repayment holiday or reduction in payments
    • Additional or temporary overdraft
    • Requesting emergency additional loan facilities
    • Requesting invoice financing or asset financing
  • Any request for additional facilities needs to be supported by a clear and comprehensive overview of your current position and the ability to repay once more normalised trading resumes.

  1. Consider your key supply chain risks - Understand the financial risks of your key trading partners such as customers and suppliers.
  • Will customers be able to pay you? If so, when?
  • Will suppliers be able to continue to supply? Are they at risk?
  • Review your order pipeline and consider whether you need to implement cost saving initiatives now.

  1. Focus on your cash conversion cycle & working capital management
  • Consider your approach to customer debt collection – can additional cash be collected with additional focus? Is it worth consider offering discounts to customers? Remember, cash is king and the focus at this time should be on cash collection and not necessarily profit.
  • Consider inventory management – can some surplus stock be sold off (where possible and without disrupting service). Alternatively, perhaps your business needs to invest in further inventory to ensure access to supplies?
  • Seek extended credit terms with suppliers (where possible and appropriate). If required to do this, it is always advisable to communicate with your suppliers.

  1. Revisit your overheads / variable cost base –
  • Consider what other overheads are non-essential at this time and reduce where appropriate.
  • Discuss payment plans with your landlord.
  • In general, consider closing unprofitable areas of your business.

  1. Review any investment plans – What is really necessary / what can be postponed?
  1. Review your business interruption insurance - Companies should understand existing business insurance policies and the coverage they have in the event of a significant business disruption to see if they qualify for a claim.

  1. Consider other ways to potentially raise funds, such as:
  • Invoice Finance or debt factoring
  • Asset based lending
  • Mortgaging property or refinancing other unencumbered assets
  • Sale of assets and lease back
  • Sale of surplus assets
  • Shareholder / Director to invest funds
  • Third party investment

  1. Consider a time-to-pay arrangement (“TTP”) with HMRC
  • A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement – call HMRC’s dedicated helpline on 0800 0159 559.

  1.  Government assistance
  1. If necessary, please seek help from appropriate professional advisers. 


It is imperative that communication and planning are prioritised during this uncertain time. By acting in a structured and fast manner and by understanding your risks and pressure points, you will give your business the best chance to minimise risk and disruption.

Should you wish to discuss further, please contact a member of our management team.

Interested in finding out more? Contact:

Whilst every effort has been made by CavanaghKelly to ensure the accuracy of the information here, it cannot be guaranteed and neither CavanaghKelly nor any related entity shall have liability to any person who relies on the information herein. Information given here is for guidance only. Detailed professional advice should be taken before acting on any information contained herein. If having read the guidance here, you would like to discuss further; a member of our team would be pleased to help you.