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How to juggle your finances in a pandemic

January 4, 2021
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The past few months have been extremely tough on businesses, from retail giants to SMEs. But there are things you can do to help manage your finances.

2020 was an incredibly difficult year for businesses across the UK. From independent retailers and newbie traders to corporate giants who have dominated their fields for years, very few businesses have remained unscathed in the crippling impact of Covid-19. A combination of forced closures, a lack of consumer demand, and government-enforced stay-at-home measures lurched thousands of businesses into periods of economic uncertainty and forced many to permanently shut up shop. And, for those who were lucky enough to survive, only two out of five of them believe they have enough left of their arsenal to tide them through until the end of the crisis.

Many small to medium-sized businesses (SMEs) are in significant need of capital if they want to carry on trading into 2021 and beyond. However, for businesses around the country that have successfully weathered the COVID storm thus far, it's still important to be financially savvy and to keep tight control over all levels of cash flow. So, with this in mind, the Market Finance team has compiled eight simple tips for looking after your business's finances, to help you and your SME emerge from this pandemic in the best position possible. But, before we reveal them, let's look at the impact Covid-19 has had on businesses across the UK.


As recent research has found, 23% of UK SMEs had little to no savings in the bank before the pandemic hit. This, in part, explains why, throughout the first lockdown, more than a quarter of companies in the UK were forced to close, and why the ones that remained open reported significantly lower turnovers.

Despite a slow pick-up in trade throughout the summer months, data from Statista shows that, as a second national lockdown loomed in October, almost one-quarter of all businesses in the UK had temporarily paused trading. Some industries, however, were hit much harder than others: the arts, entertainment, and recreation sector saw the highest amount of business closures at 82%, compared to only 3.5% of human health and social work businesses.

Cut to the current day, and the economic situation for most small businesses remains worrying. Data from FSB's Small Business Index (SMI) shows that out of 1,564 small firms questioned, half of them expected a fall in the first quarter of this year. This also is likely to stem from fears that their revenue may dip even further through the winter months before it begins picking up again. So, while business owners wait for more comprehensive governmental support, here are some tips and tricks for keeping your business afloat in the meantime.


Understand your financial situation

Before business owners can make any informed decisions regarding a company's cash flow, they need to have a thorough understanding of their current financial position. Without a complete overview of finances, it's almost impossible to make critical decisions concerning employees, outstanding debts, loan repayments or future investments. Therefore, if you want to gain greater control over all of your business's core operations, understanding your SME's financial status is a very important first step.

The best way to do this is by keeping a close eye on your financial statements. Financial statements being written records that convey businesses' activities, as well as their financial performance. They are often audited by accountants, firms, and government agencies. Examples of financial statements include balance sheets, as well as cash flow and income statements. Monitoring and understanding your company's financial statements is key to helping you juggle your finances, as they help you make important decisions and make it possible to receive credit.

For example, records like account receivables reports show which customers' payments are outstanding, and the duration in which they've been unpaid, helping companies to keep on top of slow-paying clients. Business owners and employees are also able to generate reports, to better understand their company's inventories, as well as a range of other financial matters, so they can know as much about their business as possible before final decisions are made. In terms of credit, most vendors will ask a company to provide their balance sheet before any capital is administered. This is so they can have a clear overview of how much money is flowing in and out of your business. For this reason, staying on top of your business statements will likely make it much easier to achieve credit in the future; which, in light of current events, is a crucial way to remain financially viable.

Limit your cash outgoings

Once you've got a comprehensive view of your business's finances, a sensible next step would be seeing what you can do to limit cash outgoings. One significant way you can do this is by attempting to renegotiate the terms of some key contracts - like rehashing the terms between a landlord and tenant.

Rent continues to be one of the top expenses for SMEs across the country. Since the coronavirus pandemic and subsequent restrictions have significantly reduced consumer footfall, it's increasingly hard for businesses to make ends meet. And, while the UK government extended support to prevent UK business evictions throughout the whole of 2020 in order to provide commercial tenants with greater security, it's unclear what support - if any - will be in place during 2021. Therefore, to safeguard your business, and to give it the best chances of survival, it may be worth your while to request some concessions from your landlord.

These concessions could include discounted rent, a rent-free period, a rent deferment using a payment plan, or a service change reduction - depending on the severity of your situation. While these types of rent renegotiations are rarely enjoyable, many landlords are showing flexibility in light of the current events, as they would rather come to a mutual agreement; rather than outpricing a tenant and having to deal with an empty lot.

In addition to this, another way you can limit your business's outgoings is by negotiating with your suppliers. When we talk about suppliers, we're referring to wholesalers or distributors - or anyone who provides products or services to your company. Your suppliers rely on you just as much as you rely on them, so they are normally open to negotiating lower prices if it means keeping you as a customer. Additionally, it's always worth double-checking if they have quantity discounts that may apply to your business, so you're able to ensure you're always getting the best deal possible.

Manage your cash flow

After you understand your business's financial situation with greater clarity, it's time to implement this knowledge by managing your cash flow. Throughout 2020, most SMEs have been forced to deal with consistent drops in demand, lots of extra expenses, and late payments from customers who are also struggling financially. This unpredictable landscape will undoubtedly transform the cash flow for lots of businesses, and leave many in positions they have never experienced before. However, there are loads of ways that business owners and employees can manage their company's cash flow to restore control over their company's finances. Lots of these techniques revolve around efficiently managing your debtors.

So, in order to tackle late payments to improve your cash flow, you can review your sales ledger to see who still owes your SME money (before sending out invoices and chasing down payments promptly to address this issue), offer discounts for early payments, or offer customers payment plans if they are struggling to repay their debts. Additionally, invoice discounting, which allows business owners to leverage the value of their sales ledger, may be useful because it helps to provide a trusted source of capital throughout the month. All of these steps will help you to address customers who are continuously paying late or not paying at all - to ensure your business maintains a healthy cash flow.

Make the most of remote options

But chasing down customers for outstanding payments isn't the only way to stay on top of your company's finances. There are also loads of ways that business owners can take advantage of their current situation to cut down on expenses. And while it's hard to find the silver linings of Covid-19, the switch from working in offices to working from home actually does offer businesses a lot when it comes to cost savings.

During the first and the second nation-wide lockdowns, the UK population were ordered to work at home if they could, causing a massive shift to the way lots of us conduct our business. While these restrictions have since been lifted, a large proportion of the workforce has decided to minimise the risk of infection by continuing to work remotely. So, in addition to reducing the spread of the coronavirus, here are some ways that working from home can lower a business's expenses, and potentially help them earn more too:

1. Rent and utilities

Renting office space is a massive expense for businesses, especially if they're on the smaller side or are just starting out. Fortunately, though, this large move to remote work is making many business owners rethink their model. If most of the team is working from home, it makes sense to save on paying for office space and for utilities like energy and water. Whether it's a short-term solution or you want to open up your business to full-time remote or hybrid ways of operating, it helps to dramatically cut overheads, so you have more cash to invest back into your business or save for a rainy day.

2. Taxes

Since payroll, sales, and property all contribute to the amount of tax your company needs to pay, making changes to your workspace may also have knock-on effects for your annual tax burden.

3. Food

If your company provides a cafeteria service or hot drinks and refreshments to members of staff who work in the office, this cost will also be absorbed if some or all of your team decide to work from home.

4. Increased productivity

Research by IWG has shown that workers who telecommute are almost twice as likely to work over 40 hours a week, compared to office workers. This growth in productivity, in turn, has the potential to significantly improve the amount of profit being generated by a workforce. Even though remote working is unlikely to increase productivity in all cases, working from home is understood to boost output because less time is spent commuting, staff are able to work to their own schedules, and they aren't as distracted by the rest of their team in the office.

Harness free digital tools

Leading on from the last point, another way to manage your finances by saving on expenses is by making the most of free digital tools that streamline the efficiency of your business.

When it comes to keeping your team connected, there are loads of platforms you can use that don't require you forking out the big bucks. Skype and Zoom are both big players in the video calling industry, and they have only risen in popularity throughout the coronavirus crisis. They both offer teams completely free ways to conduct remote conference calls and meetings, and they also both feature easy-to-use and slick interfaces. Microsoft Teams and Slack also both provide free platforms that let you chat with your team, create private groups, and share files so you don't need to slash a lot of cash to keep your workforce connected. However, if you are willing to pay a little bit, most of these tools also offer advanced plans with more features at a little extra cost.

Looking for ways to get your business's name out there without breaking the bank? There are also a bunch of sophisticated, free marketing tools out there that let you analyse trends and maximise your company's search results, including Google Trends, Google My Business (GMB), and DigitalGarage. Probably standing as the most well-known marketing tool, Google Trends allows you to see how often certain subjects of keywords have been searched over a certain period of time. It's a useful way to identify emerging trends, and to monitor the success of your own brand, so it is great for giving your company a competitive edge. Google My Business also enables businesses to achieve better search visibility, while helping you manage how your business appears on Google Maps; and DigitalGarage is a free online learning platform that delivers training on useful subjects like marketing and digital technology.

Consider your staff

Employees are the lifeblood of every business. Without a dedicated workforce, it would be impossible for your business to achieve success. So, naturally, trying to hold on to your staff through this difficult time is going to be a top priority for many business owners. Therefore, a great way to diversify your team's talent and expand their potential is by cross-training your existing employees. Cross-training staff allows members of staff to perform a much wider variety of roles in the business, giving them the opportunity to learn new skills and helping to future proof-your SME at the same time. It also saves on the cost of hiring new staff that are specialised in a particular field.

Unfortunately, we understand that many businesses do not currently have the resources or capital to invest back into their team. So, if you are forced to cut back on payroll expenses, it is important that you are open and transparent and consult with your staff carefully. Some options that you may consider are reduced hours, reduced pay, or, in extreme cases, redundancy. However, before drastic decisions are made regarding the security of your workforce, it's wise to see what government support is available first - as we will go on to explore next.


If you're a small or medium-sized business that has managed to survive the worst of the pandemic, it's likely that you've taken advantage of some form of governmental support. With the first round of stimulus measures being announced in March of 2020, Rishi Sunak more recently unveiled a series of new measures in October to tide businesses through the winter. So, here's a rundown of how these new actions may be able to provide support to your business.

For all businesses

If your company requires extra support to help retain employees through periods of lower demand, the Job Support Scheme (JSS) may be able to help. It's available to all businesses who are experiencing reduced business activity due to Covid-19, and who have been using a UK PAYE scheme on or before the 23rd September 2020. In replacement of the Coronavirus Job Retention Scheme, which had been extended until December, the JSS subsidised 22% of employees wages who are forced to work reduced hours due to the coronavirus.

For micro and small businesses

For smaller businesses who are looking for financial support as we enter the new year, the Bounce Back Loan Scheme (BBLS) may be a great way to take some pressure off. It is catered towards smaller enterprises and provides loans that range from £2,000 to £50,000. The loans are interest-free for a year because they are 100% government-guaranteed, and after 12 months, the interest only raises to 2.5%. You're able to apply if your business is based in the UK, was established before 1st March 2020, and has been adversely impacted by Covid-19. However, if you're keen, you'll have to hurry, as the scheme is only open until 31st January 2021!

If you're in need of more emergency help, the Future Fund also provides working capital to select companies who are facing financial difficulties due to the coronavirus pandemic. Delivered by the British Business Bank, the Future Fund provides additional support to companies who have already secured finance from private investors. The funding is in the form of convertible loans ranging from £125 thousand to £5 million, and they match or exceed the amount given by private investors.

For medium-sized businesses

For businesses who are looking for slightly more substantial amounts of funding, the Coronavirus Business Interruption Loan Scheme (CBILS) provides loans to companies grappling with the effects of the coronavirus. It helps small to medium-sized businesses to access loans of up to £250 thousand, and all finance is 80% government-guaranteed; so the borrower doesn't need to pay interest for the first year either. Your business may be eligible if it is based in the UK, has an annual turnover of less than £45 million, and is able to prove it's been adversely affected by Covid-19. Much like the Bounce Back Loan, it's only accepting applications until 31st January.

If you think that this loan scheme may be beneficial to your business, Market Finance can help you through every stage of the application process. We're 100% government-guaranteed, and provide an easy-to-use platform, so you're able to apply for finance in minutes without any unnecessary charges or fees.

For the self-employed

Whether you're a sole trader, business owner, or freelancer - the self-employed population have had a tough time throughout the Covid-19 crisis. Luckily though, the Self-Employed Income Support Scheme (SEISS) is here to help those who are self-employed or a member of a partnership, as long as their revenue has been affected by the coronavirus. It's likely you will be eligible for the third round of the grant if you received the first and the second, and the third instalment is designed to be worth 80% of your average trading profits (capped at £7,500). The grant does not need to be repaid, but it is subject to both Income Tax and self-employed National Insurance.

Make the most of the changes to VAT

Aside from government funding initiatives, the Winter Economy Plan also revealed a series of tax cuts and payment deferrals targeted at making it easier for UK businesses to recover from the impact of Covid-19. Since you need to opt into most of these VAT schemes, it's important to be aware of the ways that they can help ease your business's financial burdens.

The New Payment Scheme is available to all businesses which deferred VAT in the period from the 20th March to 30th June 2020. It gives affected businesses the option to spread the deferred VAT payment over 11 equal instalments through the financial year 2021-2022. It's designed to give businesses who are backed up on their VAT payments necessary breathing space, and the process for opting into this scheme will be announced sometime in the next couple of months.

For businesses who operate within certain sectors, the Temporary-Reduced Rate of VAT for Hospitality, Holiday Accommodation and Attractions offers a reduced VAT rate of 5% for supplies (down from the original 20%). The reduced rate was originally announced on 8th July, and has now been extended until 31st March, so businesses are able to take advantage of it for a longer period. Supplies that are subjected to this reduced rate include, but are not exclusive to: food and non-alcoholic beverages, hot-takeaway food, sleeping accommodation, and admissions to attractions such as theatres, concerts, and museums.


Despite the coronavirus whipping up a storm for most businesses throughout 2020, as we enter a new year, and hopes of a vaccine are firmly on the horizon, most businesses are finally feeling positive about what the future will bring. 71% of small to medium-sized businesses have expressed optimism regarding their success in 2021, displaying a gradual growth in confidence within the business sector.

But, despite hopes of stable economic recovery, it's unlikely we're going to be returning to pre-covid levels of growth any time in the immediate future. So, for all those SMEs who are still struggling to juggle their finances, putting these tips into practice will hopefully provide the support necessary while we patiently wait for business to pick up again.

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