Protecting your cash flow and securing your business’s future in 2021

Protecting your cash flow and securing your business’s future in 2021

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As we’ve waved goodbye to a year none of us will forget, it’s fair to say no business has been safe from the effects the coronavirus pandemic has brought with it.

The recent ‘Business Impact of Coronavirus Survey’ (BICS) from ONS highlighted the drastic impacts in astonishing detail.

The figures revealed that nearly half (42%) of businesses had less than six months left of its cash reserves by the end of the year, and a further 21% were unsure of the funds they had available. 

This uncertainty was, and still is, a major concern for SMEs, as their future still hangs in the balance.

And, as we’ve reached 2021, it’s now more important than ever for SMEs to have plans in place to secure the future of their business, as reports have shown we could soon be making our way into a ‘prolonged recession’.

This will mean a major cause for concern for SMEs will, of course, be its cashflow.

With small businesses likely to continue to be the hardest hit from the ever-changing restrictions and various impacts on operations these updated rules cause, there’s, unfortunately, another issue many SMEs will need to be aware of during 2021.

As we discussed in our most recent blog post, when the first set of restrictions came into place in March 2020, the government was quick to launch various loan schemes the following month to ensure businesses could stay on their feet.

But, in April 2021, a year since the Coronavirus Business Interruption Loan Scheme (CBILS), the Bounce Back Loan Scheme (BBLS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) were first introduced, we’ll see lenders start charging interest on any money borrowed by businesses.

On top of that, any business who deferred VAT anytime between March or June of 2020 will also be expected to pay this debt to HMRC before 31st March 2021, or enter into negotiations for a longer Time To Pay scheme (TTP). 

It is expected that these schemes will be forthcoming, but the conditions and costs are yet to be announced. 

And as businesses continue to struggle with the financial pressures that the ongoing restrictions have led to, we’ve already seen many business owners looking to try alternative methods to ensure a healthy cash flow forecast for 2021.

Nearly half of all businesses have seen reduced turnover compared to 2019, which has placed untold pressure on businesses trying to get back on the road to recovery.

One method we have been encouraging business owners to utilise as part of their recovery plan is bad debt protection.

This is where a third-party company, like the team here at Peak Cashflow, will insure your debtors for a percentage of the value of an invoice if the customer fails to pay.

This is a common occurrence, particularly during this economic downturn, as other business stall payments, or often genuinely don’t have the funds available to pay their invoice on time or at all.

For SMEs who heavily rely on suppliers paying their invoices on time, having bad debt protection cover ensures that they can stay afloat, even if they have undisputed invoices left unpaid.

Unfortunately, some businesses will also be hit badly as the payment of the deferred VAT holiday is due in March, and the Coronavirus loan schemes interest fees will kick in the following month.

Bad debt protection covers you whereby if any of your customers, who are hit hard in 2021, become insolvent and are unable to pay for your services, you will be able to safeguard your business and still be covered for any payments to a certain percentage.

And with statistics revealing that 1.4 million SMEs are suffering due to their customer’s inability to pay their invoices, it’s now more important than ever to ensure your business is secure during these difficult times.

If you’d like to discuss bad debt protection, or our range of invoice factoring services available, please get in touch with a member of our team on 0121 236 7575 or email us at