During a financial crisis it’s important for businesses of all sizes to focus on becoming more resilient. By introducing more resilient processes and ways of working, businesses can ride the wave of economic uncertainty and help stay in a more stable and secure financial position.

Below are some examples of how your business can ensure its financial resilience.

1. Working capital
 

Sometimes referred to as net working capital, working capital is the money you have left in your account after income and expenditure has been factored in. It’s the money your business needs on function.

Businesses that don’t manage their working capital put themselves at risk as may not be able to meet their financial obligations.

Creating a cash flow forecast lets businesses see how much working capital they need. Shortening your cash flow cycle is an effective way of improving how you manage working capital. The ways in which you can do this are:

• Reducing the amount of time customers have to pay. This will bring more cash into the business at a quicker rate.

• Increase the length of time you have to pay suppliers. This will keep more working capital in your account.

• Manage your inventory effectively by only buying what you need. Don’t tie up working capital in excessive amounts of stock.

Read more about working capital on the British Business Bank website.

2. Reduce your business costs

By cutting back on what you spend within your business, you can make sure it stays in a stable financial position.

Some areas businesses can make savings include:

Office accommodation
Are you in a position to downsize your office? Or could your staff work from home? Reducing what you pay for business premises could result in big savings.

Create a budget
Seeing your ingoings and outgoings written down can really help focus the mind on what’s essential. By monitoring your spending - as well as your income - you can better forecast for the future and eliminate any unnecessary costs. If you’d like more professional help and advice in this area, the ICAEW Business Advice Service can connect entrepreneurs, start-ups, and SMEs with ICAEW regulated accountancy firms that provide free initial consultations without obligation. You can find more information about this service on the North East Growth Hub.

Explore tax efficiencies
SMEs can benefit from a range of tax reliefs so it’s important to make sure you’re aware of all the options available to you. There’s lots of information available on GOV.UK, including fact sheets and webinars looking at everything from rate relief to tax deductible expenses.

Get the best deals
Money Saving Expert, Martin Lewis, always recommends that consumers avoid automatic renewals and shop around for the best deals; and the advice is the same for businesses. Don’t let your phone, business insurance, or broadband contracts rollover, as it’s likely you won’t be getting the best prices.

Always renegotiate every year and don’t forget to haggle. Always strive to get the best price and don’t be embarrassed to ask for a discount / better rate. The worst that can happen is someone says no.

Find more examples on how your business can reduce its costs on the British Business Bank website.

3. Review your supply chain

It’s always good practice to make sure your supply chain is working as efficiently and effective as possible, especially during challenging economic times.

Consider if your current suppliers are delivering the best for your business. Could it be beneficial to change them? Would it make sense to build up some safety stock to manage any changes in demand?

You can also improve your working capital position by taking full advantage of your creditors’ payment terms. Make payments on the last day they are due by using electric BACS payments.

The British Business Bank recommends using supply chain finance or other forms of asset-based lending to free up additional working capital from your supply chain.

Read more about reviewing your supply chain on the British Business Bank website.

4. Improve your businesses’ credit score

Your credit score provides potential lenders with information on the financial health of your business and its ability to manage credit and debt.

A number of different factors go into creating your credit score, but it’s important to maintain a healthy one as it impacts your ability to access finance.

Whilst there’s no way to guarantee an improvement to your credit score, there are some steps you can take to that may help, including:

• Filing full accounts with Companies House, rather than abbreviated accounts
• Be on time with your bill payments. Late payments affect your credit score
• Use a business bank account so you can demonstrate your turnover
• And only apply for credit when you need it. Too many, and you can generate ‘footprints’ (multiple searches) on your credit score.

Learn more ways you can improve your business’ credit score on the British Business Bank website.

If you’d like help and support accessing finance and funding for your business, visit the Finance and Funding Toolkit or book an appointment to speak to our Growth Hub Connectors who can provide free, impartial advice.