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Swoop’s 10 steps to improving cash flow and working capital immediately

Swoop FundingCall our dedicated COVID-19 finance hotline on 0203 868 0364 between 8am and 6pm, 7 days a week.

This is a crucial time for businesses facing a coronavirus-induced cash crunch. You’re right to be considering immediate steps to improve your cash flow, particularly over the next twelve weeks. And you’ll also be looking closely at your working capital needs for the next twelve months.

You can make savings now immediately. If you’re registered with Swoop we can instantly match you with savings solutions across your everyday spend.

Here are our ten steps to help you save, improve cash flow and boost your working capital:

1. Monitor cash flow daily or at least weekly

If you don’t already use online accounting software, now’s the time! There are different brands of software but they all allow you to store your accounting information in the cloud so you can stay on top of your cash flow wherever you are. Most importantly you can view cash flow forecasts with a few mouse clicks. Swoop can then integrate with your accounting software to simplify and speed up any application for funding.

2. Make savings, cut your everyday costs

Right now, there are a number of savings Swoop can help you make across your cost base, e.g. in banking, foreign exchange, utilities, insurance and broadband costs. By securely integrating your bank account Swoop can quickly analyse your everyday spend and identify where you can make savings immediately. Over the last 12 months we helped 2,582 businesses make total savings of over £2m in bank switching, £611,956 in foreign exchange and £381,911 in utilities.

  • Open another bank account (i.e. multi-banking)
    If you don’t want to shut down your current bank account (and we would advise against this in the current climate) you could consider multi-banking. You could open an additional account and move the most expensive transactions to it. Some banks, for example, have specialist benefits for businesses who are more digital.

    We save our customers on average £1,300 a year with changes to their banking.

    Even if a different bank is offering you a dowry or incentive – or the same services as your current bank but for a much lower fee (and lower overdraft changes) – there is a perception among businesses that switching is difficult. It’s not. It can be done quickly and you won’t miss a direct debit or standing order. And there are significant savings to be had.
  • Change your international payments (foreign exchange) provider
    Do you do business overseas that involves sending money to (or receiving money from) foreign bank accounts? As part of our process, we’ll identify where you can save money on your international payments. Businesses who have switched their international payments from their main bank to a different provider have saved on average £8,000 over the 12 months with Swoop. This is because providers offer different exchange rates and transfer fees, and in some cases the bank receiving money charges fees. Once you’re registered with us we can see whether your business can benefit from switching.
  • Change your energy supplier
    We know that some energy suppliers still have excess supply after the mild winter, so now is a good time for businesses to review providers. Swoop can look at your energy bills and bank accounts, put a figure on potential savings, and help you switch provider.

3. Sell your unwanted assets

Can you cash in on equipment that you no longer use, or inventory that might soon become obsolete?

4. Don’t buy it, lease it!

If you need computers or other business equipment, consider leasing them to avoid tying up cash. You can still expense the lease costs when you calculate your business taxes. And if you have an existing lease, you might be able to get better terms.

5. Be clever with your invoices

Given that many employees are working from home, don’t post invoices – email them. Make a quick phone call before you email so you know the best email address. Ask for more than one email address (or a general one) so that you can copy in at least one other person or department in case the person you called isn’t available.

It might seem obvious, but make a point of sending invoices as soon as the work’s completed or products are delivered. If you are on the go or in a hurry you can create instant PDF invoices via a free invoice creator and send them straightaway by email.

Consider invoice finance as a way of borrowing money using your unpaid invoices.

6. Cushion your cash flow and boost working capital

Think about other ways to cushion your cash flow and boost your working capital. You might already have one or more of these in place, but consider the following:

  • revolving credit line (even if you don’t need it right now, a line of credit is an easy way to delay cash flow problems. Think of it as an insurance policy. You might be able to get a line of credit using your accounts receivable or your inventory as collateral)
  • business credit card (we can help find providers who might offer interest-free periods – you may want to apply soon before your credit rating deteriorates)
  • business overdraft (if you need cash quickly or you want a safety net to use when you really need it)
  • short-term or medium-term business loan (e.g working capital loan)
  • invoice finance (i.e. invoice factoring, invoice discounting and CHOCs)
  • trade finance (if you’re dealing with international buyers and suppliers)
  • business cash advance (e.g. merchant cash advance)
  • asset refinance (sale and leaseback)
  • purchase order finance (if you are a product distributor or reseller and need an advance to fulfil a specific order)
  • R&D tax credit loan.

7. Speak to your customers

  • Discuss with your customers how they are being impacted and how how you can best support each other. Look for new customers who might have issues in their supply chain. There are always opportunities out there.
  • Incentivise your customers to speed up payment by offering deals, for example a discount for early payment. Do some calculations first to make sure it’s a worthwhile trade-off between getting paid early and losing money in the long run.
  • If you haven’t already done so, ask your customers for deposits or partial payments on large orders or longer-term contracts. For example, you might charge a 20% deposit upfront, then charge another 30% when you start work, and the balance when you complete. By charging this way, you can generate enough cash to finance any materials and pay your workers.
  • If you sell products or provide services at customers’ homes or offices, consider using a mobile payment app. You’ll then be able to take payment on the spot using a credit or debit card with your smartphone or tablet.

8. If you have bank deposits, make them work for you

If you have cash sitting in your bank account earning little or no interest, especially in light of recent interest rate cuts, now’s a good time to look for a better home for it. Of course it’s still important to keep adequate funds for your cash flow needs, and enough headroom to cope with unforeseen circumstances. This might mean that managing your cash becomes a more critical activity in the future.

9. Call HMRC to agree a Time To Pay arrangement for tax

If you think you’re going to struggle to meet your tax liabilities, a Time To Pay arrangement with HMRC would allow you to spread your business tax payments over a longer period of time. If coronavirus is the reason you cannot pay your tax on time, HMRC has a designated helpline: 0800 015 9559. It’s open Monday to Friday 8am to 8pm, and Saturday 8am to 4pm.

10. If you have outstanding R&D tax credits, fund them with an R&D tax credit loan

If you have outstanding claims for R&D tax credits and/or claims that are likely to be delayed by the increased pressure on HMRC, we can find funding for these in the form of a tax credit loan. This is a relatively new type of loan that uses your future R&D tax credit payments (from HMRC) as security.

The main benefit of an R&D tax credit loan is that you can access funds within a week. This is helpful because you could be waiting many months before you receive your tax credit from HMRC. Swoop can match you with the most appropriate provider for you.

We’ve split our COVID-19 guidance into three main sections – see below.

A summary of the government-backed support for businesses impacted by coronavirus.

Swoops’s ten steps to improving your cash flow and working capital immediately

Frequently-asked questions about the COVID-19 government-backed support for businesses.

You can call our dedicated COVID-19 finance hotline on
0203 868 0364 between 8am and 6pm, 7 days a week.

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