The initial shock of Covid left people and businesses reeling; the impact was
as rapid as it was immense, and overwhelming in some instances. Throughout 2020 we operated against a backdrop of uncertainty and constant change, supported to a degree by unprecedented financial support from the Government.

We don’t yet know what the long term economic ramifications of the pandemic will be.  In December the Bank of England estimated UK companies could face a cash-flow deficit in the 2020-21 financial year of up to £180billion; in October it estimated that up to £70billion of that deficit would sit with SMEs. And all that was before Lockdown 3.0 hit us.

Across all market sectors, Covid presented its challenges – and exposed existing vulnerabilities.  Now, surrounded by continuing economic uncertainty, maximising cash-flow has quite rightly made it back to centre stage for many businesses.

Your supply chain – check the links
Most businesses will have experienced some degree of supply chain disruption, whether as a result of a surge in demand, or logistical difficulties in sourcing materials. So how does your supply chain stand up to scrutiny?

Look at your existing suppliers and try to assess their ability to meet your current and future needs.  Are they reliant on others to fulfil your requirements? Might they face productivity issues or logistical difficulties in fulfilling orders?  This may help you to identify potential challenges and to plan accordingly.

Be alive to possible warning signs that your suppliers are in financial difficulty - a request for a change in payment terms, late delivery, or reduced communication for example. How you decide to respond will depend on the commercial importance of the relationship, but at the very least try to establish whether this a temporary “blip” or something more endemic. It may also give you an opportunity to re-negotiate a more favourable arrangement.

• Ensure that you are familiar with the terms of your supplier contracts. Understanding the contractual rights and obligations of each party will enable you to ensure compliance, identify vulnerabilities and take action where necessary.

Consider your own terms of business – are they still fit for purpose? It may be, for example, that your business has evolved since the terms were drafted or that your terms no longer dove-tail effectively with those of your suppliers. This is an opportunity to consider your ongoing business needs, how best to meet those going forward and to try to address any risks you may have identified.

Debtor management – consider this
Cash-flow is critical to the success of any business, of course, but with limited resources under strain for obvious reasons in recent months, debtor management wasn’t necessarily at the top of the priority list. In fact there was understandably some reluctance to chase debt whilst we were all struggling to adapt. And who was actually ready to accept that the crisis would still be ongoing a year down the line? 

Billing and collection is a key component of managing cash-flow.  Sales do not guarantee money in the bank, so look at your billing processes – is there room for improvement? Are invoices being generated promptly and regularly? The sooner you invoice, the sooner you can expect to receive payment.

Sending out regular statements of account or reminders to customers can often help identify potential issues before they become problematic, and it keeps your invoice front and centre – the squeaky wheel gets the most oil after all.

Knowing when payment is due can be crucial to managing cash-flow and debt. Robust processes can identify problems early, and allow steps to be taken to address those. Ensure that you are familiar with the late-payment provisions of your terms of business – know what you can do and when.

• Time spent analysing the payment performance of your key customers may enable you to identify any changes to their payment practices, which could be an early indicator of financial problems.

• Don’t forget the small debts – their cumulative value can be significant. Commercially there will be a point where it is no longer viable to chase payment, but try to avoid the temptation to simply write off small debts, whether due to embarrassment or the hassle factor – it may take nothing more than the cost of a phone call to recover payment.


Kelly Mills is a Partner and Head of Debt and Leasehold Recovery at DMH Stallard.

She can be contacted on 01293 558554 or by email at

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