COVID-19 – Cashflow After Lockdown

In our debt recovery blog series, we have covered the process from start to end and the problems associated with COVID-19.

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COVID-19 – Cashflow After Lockdown

Over the summer, we have all seen the increasing number of companies falling into financial difficulties due to the pandemic which continues to affect everyone regardless of whether they are a small business or large.

The ONS has just released a report stating that 54% of business now have invoices which are outstanding, and one in 10 business are at risk of insolvency in the coming weeks and months. It is no exaggeration to state that recovering overdue invoices is therefore critical in attempting to survive the fallout which will be felt in the 3rd quarter of the year.

See our tips and advice below for how to tackle this problem;

1. As ever, don’t delay.

Once lockdown is eased and businesses return to the office, albeit this is likely to be with some modification to working practices, you can be a little reassured that your letters will be read. As such, as you look towards your own recovery and your cashflow, don’t delay in sending a letter requesting payment as most sensible business owners will now be looking towards ensuring their liabilities are met to prevent falling at the last hurdle.

2. Check the impact on your debtors.

This crisis has so far been developing over a relatively short period of time, and yet the economic consequences are likely to be felt for months or even years longer. It is therefore vital that you carry out checks on your debtors to assess your chances of recoverability, For example, do they have any CCJ’s now registered? What is their credit limit /score and has this changed recently? Have they appointed administrators or entered liquidation? There may be little point in throwing ‘good money after bad’ if the answer to any of these questions is ‘yes’.

3. Check if your debtors have accessed the Government schemes.

This point is trickier because there is no public register so you will have to rely on your debtors being honest. If you find yourself hitting a brick wall with your letters requesting payment, change the dialogue to asking whether they have accessed the Government schemes. For example, have they had a BIS loan because, if so, they should be using this to meet their liabilities and you may feel it less risky to proceed with legal proceedings given they have funds but still refuse to pay.

4. Many businesses are now in the same boat in having overdue invoices which will in turn affect their ability to pay in full in some instances. This is where you need to be reasonable with repayment as far as possible, but always assessing the effect on your cashflow and how long you can realistically give for a payment plan. Try to agree an amount which is affordable to both parties, otherwise your debtor may be forced into insolvency and the returns would then be nominal.

If you require any assistance in emerging from lockdown and tackling the inevitable impacts on your cashflow, please contact us at .

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