With the easing of lockdown well underway, and more businesses likely to be allowed to open next month, it is now time for many companies to prepare for what their operations may look like in the post-coronavirus world.

While restarting operations will be welcome for many businesses – which have potentially spent months with no work or reduced output – it is essential that business owners and employees accept that returning to work will come with challenges and caveats. From cash flow issues to social distancing measures, companies will need to adapt to these challenges to overcome the consequences of COVID-19 and embrace the ‘new normal’ of post-lockdown trading.

In this blog, we detail the challenges businesses may face upon returning to work and how they can use finance to adapt.

• Reduced cash flow and profit
• Sudden increases in demand
• Implementing social distancing
• Reduced productivity
• Supply chain issues
• Guidance in overcoming your business challenges

1. Reduced cash flow and profit

Lockdown has already had a considerable impact on the economy, with many businesses seeing reduced output, fewer sales, and falling revenue. It is thought that that economic recovery may take years, meaning that companies may continue to struggle financially even with lockdown easing.

Upon returning to work, businesses will invariably face cash flow issues due to a lack of income over the last few months. However, good cash flow is needed to make any business successful, allowing them to invest in supplies and equipment, pay the bills, and meet staff wage requirements. So, having the right funding in place to boost cash flow is vital to help your business survive in a post-COVID-19 world.

Fortunately, there are government-backed schemes in place that can provide an injection of funding for companies who are struggling during this time. The Coronavirus Business Interruption Loan Scheme and Bounce Back Loan Scheme are both aimed at easing the strain on UK businesses and are still open for applications. If your business is facing cash flow issues due to COVID-19, it is worth considering applying, as doing so may enable you to restart your operations and recover more quickly.

2. Sudden increases in demand

While many businesses are facing issues with falling demand as a result of the COVID-19 pandemic, for some, it is the opposite. Certain companies, such as those involved with food, cleaning, and IT, are seeing spikes in demand. Similarly, businesses who are reopening after being closed since March may experience similar demand, with customers potentially making up for ‘lost time.’ Increases in demand can be daunting, particularly after a period of reduced activity. However, having the right finances in place can help you to meet demand.

While CBILS and other government-backed initiatives are primarily focused on struggling businesses, there are alternative options out there to help companies who are experiencing growth. For businesses selling to B2B customers, these options include trade finance, which helps fund your imported supplies you need to fulfil orders, and invoice discounting, which will enable you to obtain payment on an owed invoice, meaning you can improve cash flow in your business while waiting for customer payment.

Another option for businesses seeking funding to achieve growth is angel investment. ‘Angels’ are individuals looking to invest in companies in exchange for equity in your business. In some cases, angels will take on even high-risk business proposals – though knowing how to create a business plan is critical. However, if you can achieve it, you can enjoy long-term financial backing to help your business meet demand.

3. Implementing social distancing

Part of the ‘new normal’ for companies is making sure that they implement careful social distancing measures throughout their business to protect their staff and customers alike. However, these measures require business owners to invest in additional equipment – ranging from plastic screens to hand sanitiser – and coming up with solutions to allow their operations to continue in a socially distanced way. This may include outdoor seating and queuing areas or new work areas to allow staff to spread apart – and setting this up will come at a cost.

To finance these new measures, businesses will need to seek short-term funding solutions. As well as invoice and trade finance, other solutions might include hire purchase or leasing. With this option, you can purchase additional equipment for your business, if required, repaying the lender in instalments rather than one upfront lump sum. Another alternative is sale and leaseback, which allows you to sell equipment with sufficient equity to inject cash into your business and lease it back via regular payments. This option works well with standard plant machinery and equipment.

Social distancing will also require you to rethink your business planning – both financially and logistically. These are unprecedented times for many businesses, so it can require many companies to be innovative in how distancing will work in their workplace. However, if you can do so efficiently, and with the right funding in place, you will be able to adapt your business for the future of social distancing – which could be in place for a long time.

4. Reduced productivity

As well as the practical element of social distancing, there are further implications that businesses will need to deal with. The biggest of these is the way their staff work – to achieve the appropriate level of distancing, companies may need to look at how many staff they have in at one time. Solutions to this may include shift patterns, staggered starting times, and spreading out operations so that employees can work at least 2 meters from one another. Similarly, workplaces will need to find increased time for cleaning and handwashing in their business. These measures will eat into the available working hours for business and reduce productivity – leading to reduced output and cash flow for businesses, unless this can be countered with increased pricing.

Once again, short-term funding solutions such as invoice finance, trade finance, and sale and leaseback may come into play to give cash flow a boost while companies adapt to changing operations. If you are facing reduced productivity and output, it may also be worth returning to your financial plan and looking at where you can trim expenses while production is down. Identify any costs that are non-critical to your business during the current situation and aim to cut them out, such as cancelling pre-planned orders and services you no longer need.

5. Supply chain issues

While your business may have faced many obstacles in the last few months, it is essential to remember that other companies will have experienced the same issues – including those in your supply chain. Even if you have managed to come out the other side successfully, your suppliers may still be facing financial problems, reduced productivity or may even be temporarily closed, which could cause delays to your own operations.

This means that, when emerging from lockdown, businesses should take time to examine their supply chain and get information about how each supplier is doing: are they facing longer work times or increasing their costs in line with COVID-19’s impact? If so, you will need to plan in the effect of this on your own business.

An example of this is the shortage of shipping tonnage worldwide, which has resulted in increased freight costs, as well as reduced border movement, both leading to longer transit time. If this is something which applies to you, it may be worth looking at suppliers closer to home.

Another option for issues in your supply chain is utilising supply chain finance, similar to trade finance. This type of finance improves your cash flow by allowing you to lengthen your payment terms to your suppliers while providing the option for your large and SME suppliers to get paid early. Your lender pays for stock purchases directly for the buyer and is then repaid by the buyer at a pre-set future date; usually at the end of the trade cycle when debtor funds are received, this might be via invoice discounting. This means both you and your suppliers can benefit with increased working capital.

Guidance in overcoming your business challenges

The reality is that many companies and individuals are having to deal with situations that have never been seen before, and part of this means trying to overcome new challenges. However, with the right planning and finance in place, businesses can survive and evolve during this time, with the end result of an agile company which can respond to the ‘new normal’ of social distancing and economic recovery.

If you would like tailored advice on how your business can overcome its own unique challenges and what the right funding options are for you, we can help. Our team of advisors have expertise across different business types and financial issues, so we can provide guidance that fits you.

Please call the team today for a free consultation or email [email protected].