SME Tips for Managing Cash Flow During the COVID-19 Crisis

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Article written for Virus and Crisis Magazine by Michael Rossman, Director at EnergyBillKill

COVID-19 has swept through Europe for only a matter of weeks, yet it has already brought about significant human, social, and economic ramifications.

With uncertainty ahead, many small businesses are fearing the worst. The Government’s announcement they will pay up to 80% of workers’ wages has gone some way to lifting pressure, but not for everyone, and not altogether.

Business owners are fearful of running out of money and revenue streams running dry. A £25,000 cash grant is available as part of the Government’s aid package, but this is a drop in the ocean for many. “We will do whatever it takes,” said Finance Minister Rishi Sunak on the announcement of the aid package, a rallying cry if there ever was one.

Of course, it isn’t all up to the Government to save businesses. Business owners have to play their part too if they want to survive. Everyone must do some leg work, and there are several things SMEs can do right now to steady the ship and realise cash savings.

Keep up to date with COVID 19 guidance 

The Government has published an in-depth online resource for COVID 19 and support for businesses. We recommend you save this page and spare the time to read it. You’ll find everything you need to know about the Government’s package of measures here. Please also save this page which is the Government’s COVID-19 information portal. You might also like to sign up for email alerts about COVID-19.

Look out for services that are not charging fees and/or lifting fees

There are many services that are lifting service charges, fees etc… Look out for the quickest and cheapest way to buy what you need for your business. For example, at we have lifted all broker fees. Our applications and service will pass 100% of savings to businesses that switch with us. Check out your LinkedIn news flow; many businesses across services are chipping in.

Update your financial statements

If your business’s financial statements are not already up to date, now is the time to get them in order so you can make the best financial decisions. An up-to-date balance sheet, profit and loss statement, and cash flow statement will enable you to evaluate the financial state of your business and make informed choices.

Make a list of all the possible impacts on your business and create mitigation strategies for them

COVID-19 is an unprecedented situation. For SMEs, the worst thing about it is the uncertainty surrounding it. But you can at least list the things that could impact your business in the future and plan for them with a mitigation strategy. This way, you will have at least some resilience should the worst happen.

  • Sales – How can you reduce the impact of a downturn?
  • Staff – COVID-19 is likely to make some of your employees sick. Could you cope if this happens? Could you keep them on? Could they work from home?
  • Supply chain – Your suppliers could face the same problems as you. Your business may be particularly badly affected if your suppliers are in badly impacted areas of the world, such as China or Italy. How can you bolster your supply chain?
  • Finances – Do you have enough cash in the bank to pay wages for a few months if you generate no revenue at all? How long could you sustain your operation with a 50% decrease in revenue? What can you do to bolster your cash reserves?

Act now to improve cash glow 

After you have made a list of all the things that could impact your business, your attention will turn to cash flow and how to improve it.

There are several ways to do this, from switching energy to get a better rate on your business gas and electricity, to seeking a repayment holiday with your creditors.

Stock management

  • Take a stock count so you know exactly what you have and what you need. This will help you avoid unnecessary expenditure.
  • Take steps to increase sales while maintaining a profit. Consider special offers to drive up demand.
  • Reduce your stock orders if you don’t have the demand. There is no point paying for stuff you won’t be able to shift.
  • Increase purchases of stock you have reason to believe will continue to sell well during the COVID-19 crisis.
  • Get rid of old and slow selling stock as soon as possible so you can focus your efforts on shifting faster selling, higher-profit products.


  • Cut back on your advertising spend if it isn’t giving you a return.
  • Cease your expansion plans.
  • Cut back on capital expenditure.
  • Could you reduce travel costs with an electric van or electric car?
  • Could you realise cash savings by switching your business energy?
  • Could you realise cash savings by switching your broadband supplier?
  • Is there an opportunity to convert some full-time staff to part time?
  • Is there an opportunity to reduce operational costs with your company car program?

Creditors management

  • Ask for a repayment holiday on finance and loans.
  • Check your supply contracts to see if there is an opportunity to cancel orders or at least delay delivery to reduce spend.
  • Check with HMRC if there is a way to delay tax or VAT payment. The HMRC Time To Pay Scheme is a good example.

Debtors management 

  • Contact your debtors to request payment in the next 7 days.
  • If your debtors are struggling to pay you, offer them an instalment plan.
  • Invoice as soon as work is delivered.
  • Reduce your payment terms to 30 or 14 days or even sooner if possible.
  • Make it easier for your debtors to pay you. You might like to offer online payments via Stripe or PayPal so your clients can use a credit card.
  • Update your terms and conditions to reflect your new payment terms so all new debtors fall in line with your changes.

Quick tips for managing cash flow during COVID-19

Here are 10 quick tips for managing cash flow during COVID-19:

  1. Keep on top of your inventory
  2. Shift slow selling stock as soon as possible
  3. Ensure you have a robust framework for managing supply chain risk
  4. Ensure your business finances remain viable
  5. Constantly revisit your variable costs
  6. Seek flexibility from your creditors with loans and finance
  7. Revisit your fixed costs when they come around (such as business energy)
  8. Revisit your capital investment plans and postpone investments that are costly
  9. Consider invoice factoring if you need to improve cash flow quickly
  10. Consider alternate or non-traditional revenue streams to replace lost revenue.

COVID-19 is an unprecedented situation and all business owners are facing great uncertainty right now. In times of uncertainty like this, it pays to be savvy and take a higher level of interest in the very workings of your business.

Lastly, please do make sure you keep up with Government guidance and bookmark this page so you can quickly find out more about what support is available to you. We wish you well and hope to see you on the other side.

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