Take the time now to review your plans to make sure you stay afloat



No one could have predicted the impact or longevity of the Covid-19 pandemic.

For many businesses, the past months have been focused on survival, whether that was switching their staff to homeworking, moving their services online or ensuring they complied with lockdown restrictions. So, to take the time to step back and think long-term is perhaps a luxury some feel they do not readily have in the current climate.

However, it’s crucial for all SMEs to take action now to review their strategies, examine their business models and analyse their financial resilience. Barclays has produced Keep the engine running to help SMEs do just that.

The guide has been designed to highlight some of the key issues and questions for SMEs to consider to build financial resilience – a practical roadmap of the areas they should contemplate as we navigate through the pandemic and into recovery.

While some businesses were already structured to make the most of e-commerce opportunities or to work remotely, for many 2020 has seen strategies and annual forecasts turned upside down or pushed to one side. But as we face living with the virus and subsequent restrictions for the foreseeable future, business planning must now be a focus once more.

While organisations will be dealing with the practical and economic effects every day, formally taking stock of the financial impact of the pandemic on your business is the first step. Review your existing business plan, model and budget and analyse the financial and operational impacts to date as well as considering future risks.

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Cashflow is critical and events of the past few months have only reinforced the importance of managing it well, conducting risk assessments and having funding solutions in place for unexpected situations.

If you haven’t already assessed cashflow, now is the time to prepare a detailed forecast so you can evaluate short-term liquidity and start to think about what working capital you will need as you move forward.

As you do this, ensure you have access to all the data you need to have accurate oversight of cash availability across the business. While this may be fairly straightforward for smaller businesses, as they grow data sources can become more complex and disparate. Speak to your bank to see what digital tools you can access to provide greater financial visibility and efficiency.

Effectively managing costs is also key to financial resilience. In line with cashflow, reforecast costs to ensure you are taking into account increased or additional expenses as result of Covid-19.

Take time to review all property leases, rental and other real estate costs and, if you haven’t already done so, consider what scope there is for deferrals, break clauses and reliefs to ease outgoings. Similarly review all other contractual arrangements such as debt finance and covenants, as well as those in place with employees and external suppliers.

Supply chain resilience has been a major issue for some operators during the pandemic so review contract and payment terms including building in appropriate force majeure provisions to ensure you are protected for future events.

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Map out your supply chain and tackle any weaknesses or over dependencies that were brought to light by the pandemic. It could be that you need to diversify or broaden your supplier base to reduce risk, for example. Working collaboratively with your existing suppliers will allow you to understand their challenges and determine the best solutions.

Reviewing and shoring up financial resilience now will take time and consideration. It may mean some stark realities being faced and tough decision being made, however, it can also uncover operational efficiencies, invaluable costs savings and new opportunities. And this means surely that it has to be time well spent.



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