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Business Cash Flow Conservation During Covid-19 – It’s Self Preservation For Your Company


Continuing to operate during this Covid-19 pandemic just presents you with one certainty – that there are no certainties! 

We do not know if and when restrictions will get enforced and/or lifted – or how severe they will be when they are in place. We cannot tell if they will directly close or impact our business until they ‘happen’ to us – or what direct impact they will have on our customers or suppliers – which in turn of course impacts you as well..

Cash flow conservation is not a new concept – plenty of old tricks like chasing your receivables, negotiating your payables, cost cutting to trim the excess from your business costs etc.. But this pandemic and its uncertainties have put an additional urgency on ensuring you preserve a level of cash within the business where possible – for whatever is around the next corner, and one more certainty is that we are all heading to another corner!

So what could you consider to help you to conserve a level of cash within the business while you still have overheads, delays to banking receivables and expenses related to the business as you adjust or increase your activities to meet the challenges of the times.

For some people this may be just a case of finding out what is available to them in terms of finance products and tools – for others who might have always previously managed their business without the need of finance it might be a bitter pill to swallow, or a ‘last resort’ even.

Our very recent experience shows us that cash flow is the life blood of all of the businesses that we are dealing with, and maintaining a level to get you through this pandemic, or having a sufficient level to enable you to expand your activities and grow, is worth sacrificing a small amount of your margin to cover the cost of financing your business. 

We have worked with clients on several types of finance that help them conserve cash flow in their businesses:

  • Short Term VAT Loans

One quarter’s VAT bill was able to be deferred to March 2021 under an HMRC scheme, and you can now repay that quarter over 11 months in the 2021/22 tax year. HM Treasury recognised that you need to conserve cash flow in your business, and not have to settle that whole quarter in one payment – but how does that help you with every other subsequent quarterly VAT bill that you face?

We have a lenders offering 12 week loans to help to settle some or all of your VAT bill – you can repay weekly or monthly as suits you best – but the big win for you here is conserving cash by spreading the payments and keeping some liquidity for whatever might come next.

  • Lease or HP over Buying For Cash?

Your business may still need new or replacement vehicles or equipment, and no matter how you have acquired them before it would make sense to consider conserving cash by using a Lease or HP product to put in a small deposit and financing the asset rather than purchasing it outright.

We work with a number of lenders who between them cover almost all assets that you could need for your business to operate – and a conversation with your accountant could confirm if there were additional benefits to your business.

  • Receivables can Regulate your Cash Flow

Invoice Finance may not be the most suitable product for every part of the economic cycle – but think of it another way in the current Covid-19 pandemic: what other financial facility will pay you for most of the work that you have completed just a few days after you have completed it, when your customers won’t be settling anything with you for another 60 to 90 days?

Without that immediate cash flow you will have to cover the cost of wages, contractors, overheads, suppliers – and then if you have the opportunity to take on more work or another project, do you have the cash flow to do that now or will it have to wait until your customers settles in the future.

We see this as the clearest demonstration of the ends justifying the cost of the means – many businesses won’t be able to manage without these facilities in the coming economic climate – and we consider Invoice Finance will likely be one of the best cash flow conservation tools available to companies.

  • Refinance

Your business may have property or hard / soft assets, or stock, that is unencumbered or with significant equity, that you might consider putting to work to generate much needed cash flow for your business at this time.

We work with Asset Based Lenders who our clients use to access cash that they already have but that is locked up in the existing assets of the business.

As you look at a cash flow forecast for your business, factor in the tools that might be able to help you to conserve your cash flow and spread the cost of all of your outgoings over the months and years ahead – as well as regulating your income to meet outgoings and opportunities as you have them.

We can help you to assess your options – email or call 07726 195 106 to start the conservation today – today really isn’t a day too soon.

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Essex Commercial Finance Limited  is a company registered in England and Wales with Company number 12610135
Registered Office : Suite 3, 8 Kingsdale Business Centre, Regina Road, Chelmsford, Essex, CM1 1PE

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