How to keep cash flowing during COVID-19 lockdown

How to keep cash flowing during COVID-19?

Many small businesses will be forced to make difficult decisions in the coming weeks.


While businesses are closed and sales are delayed or cancelled, suppliers still have bills to pay and expenses to meet. You would do well to assess your financial situation and cashflow needs now, and determine what additional infusions you may need to ride out the downturn.

With the stresses of the coronavirus pandemic, small business owners have the added problem of a reduced cashflow, in many cases having to re-create their business model on-the-fly to stay afloat.

"I’ve been in business for 13 years and I’ve not seen anything like it. I mean, my rent isn’t going away, my phone bill isn’t going away..."

Many small businesses will be forced to make difficult decisions in the coming weeks. Depending on your financial position, your small businesses could start to experience cashflow difficulties very quickly and you could be forced to lay off some or all of your workforce as a result.

“I’ve been in business for 13 years and I’ve not seen anything like it. I mean, my rent isn’t going away, my phone bill isn’t going away,” said one small business owner.

Deloitte published the finding of a recent university survey which estimated that 85 percent of small and medium-sized enterprises (SMEs) will run out of cash within three months, and two-thirds will run out of money in two months if the crisis does not abate.

Cash-flow management needs to be an integral part of your company’s overall COVID-19 planning. You should actively evaluate your cashflow requirements, and assess potential risks to your customers and supplier network.

Deloitte recommend (among other things):

  1. Extend payables, intelligently
  2. Manage and expedite receivables
  3. Consider alternate supply chain financing options

Pay suppliers over time

Time-to-pay arrangements are crucial for all businesses that might be struggling to pay their bills in the coming months. There are steps that your business can take to improve your chances of securing an option to defer payments. For example, Cloudfloat allows your business to pay business expenses over time, even if your supplier doesn’t offer you the payment terms your business needs. It’s “Buy now, pay later” for your business.

Turn orders into cash

Suppliers should also take simple, concrete steps now to give themselves the best chance to survive the COVID-19 outbreak.

In the current climate, it makes sense to consider whether future sales should be covered by a deposit or payment in advance. Business owners should undertake a review of existing customer orders and identify those that can be converted to cash in the quickest timeframe, prioritising those with the highest value. Keep a close eye on your order book and be realistic about which are likely to be fulfilled and which are not.

Again, Cloudfloat can help suppliers get paid, immediately. By including a Cloudfloat payment link on your invoice, your customers are able to pay over time while you get paid immediately. Your customer sends the invoice to Cloudfloat, who processes it. Cloudfloat pays you the whole amount upfront and your customer spreads the repayments to Cloudfloat out over 14-day instalments, up to 90 days.

Stay close to customers and suppliers

During any crisis situation, it is especially important to stay close to customers and suppliers. This will give you better visibility of how the bank balance might look in three months’ time and it also gives your business a chance to negotiate payment terms and collaborate to share the burden of any additional costs where appropriate.

Keep the cash position of the business under review

Your business should be taking every step you can to build up your cash reserves.

As we have seen with the spread of the coronavirus, crisis situations can evolve quickly and business owners have to make fast, well-informed decisions. To ensure you are able to do this, it is important to review cashflow forecasts regularly and discuss appropriate plans.