Getting paid during Coronavirus “pandemic”

During these times of uncertainty, we are all worried about how the Coronavirus will affect our businesses. The government has made “certain” provisions available for some employers and its employees, however for the rest of the economy who don’t provide finance or loo roll, our concerns are “getting paid during the Coronavirus pandemic if businesses don’t have money to pay.”

Shorten payment terms

Advice for the time being is for you to look at shortening payment terms to your customers. As the UK economy is uncertain for us all, by shortening your payment terms you are reducing the risk of not being paid by your customers.

Over the coming weeks companies may sadly go into liquidation, they may dissolve, they may make employees redundant, so by shortening your payment terms, you are reducing the risk for your own business of non-payment. Shortening payment terms will also assist you with maintaining a regular cash-flow, rather than perhaps waiting 30 days before you receive payment.

To shorten your payment terms, you need to have this conversation with your customers at the point of sale. So, sales reps and/or teams must be made aware of these changes right away so they can pass the information on to your customers.

Another way to reduce risks is to credit check all new customers and even monitor them to keep tabs on their credit rating over the current weeks and months. Do this with your existing customers too!

Lengthening terms

Some customers have suggested extending payment terms to their customers, however as explained above, you are putting yourself at risk by doing this. We suggest instead that you keep in touch with your clients, maintain regular contact and assess this on a case by case basis.

Perhaps for aged debtors you can compromise and offer formal and regular payment plan agreements. Ensure payment plans are monitored and paid regularly.

Keep track of your numbers

Don’t bury your head in the sand, regularly keep track of where your business finances are up to so that you can adjust things quickly when required, not when it’s too late.

Look at short term funding options:

  • Invoice Finance – this enables businesses to release funds against the value of their unpaid invoices.
  • Business Loans – quick access to money that can be used for any business purpose.
  • Asset Refinance – if you have money tied up in other assets, such as plant and machinery, you may want to consider asset refinancing to boost your cash flow.

Credit Control Measures:

Don’t presume that your customers are not busy with work or that they are self-isolating. Certainly don’t feel guilty chasing for payments and make sure you are aware that Coronavirus will be used as a “late payment excuse.”

What to look out for: If your customer stops responding to your requests for payments, then begin your formal process to recover any aged debts outstanding to you. Don’t leave it too long before you chase for payment, more than 45-60 days with no-response from your customer means it’s time to act and start your debt recovery process.

For assistance with monthly outsourced credit control, for as little as two hours work per month, we help you reduce your business risk in these uncertain times and ensure your customers pay.

Our Credit Control service includes:

  • Pro-active calling to request payments from customers
  • Running full ledger reports via access to your cloud software
  • Statement runs
  • Formal 1st reminder notice letters
  • Formal Letters Before Action/Claim/Demand
  • Statutory Demands
  • Formal Payment plan letters & monitoring for aged debtors
  • Small Claims Court assistance
  • Bailiff instruction from our affiliate if necessary.
  • Debtor Negotiation, ADR carried out by Qualified Civil and Commercial Mediators
  • Solicitors advice
  • Credit reporting, company monitoring, & land registry searches, plus general customer / debtor research and address verification
  • Daily & Weekly report updates on progress
  • Monthly conference call to discuss collections
  • Advice and support from the FJCM team.
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Government Updates:

The Government has released information to help limit damage to the economy, support people and ‘some’ businesses through this period of disruption.  

  • The provision of a grant of £10,000 to those businesses eligible to claim the “Small Business Rates Relief” or “Rural Rate Relief”.
  • Provision of a grant of £25,000 for certain businesses in the retail, hospitality and leisure sectors, whose rateable value is between £15,000 and £51,000.
  • A 100% discount on Business Rates for the 2020/21 Tax Year for those businesses in the retail, hospitality and leisure sectors.
  • Implementation of the “Coronavirus Business Interruption Loan Scheme”, to access loans of up to £5 million with no interest in the first six month

TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST BE:

– UK based, with turnover of no more than £45 million per annum
– Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations).
– Able to confirm that they have not received de minimisState aid beyond €200,000 equivalent over the current and previous two fiscal years.
– Unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term.

Further Government information:

  • For those employees who have COVID-19 or self-isolate in accordance with government guidance, then Statutory Sick Pay can be claimed from the first day of sickness, rather than the fourth.
  • For those employers with fewer than 250 employees, they will be able to reclaim Statutory Sick Pay relief. This refund will cover up to two weeks’ Statutory Sick Pay per eligible employee.
  • Mortgage lenders will offer a three-month mortgage holiday to those struggling to pay
  • Some clients have been given support from lenders for existing loans , in particular Funding Circle and finance and HP lenders, in the form of repayment holidays of between 3 and 6 months. It is worth a call to your lenders if you have loans outstanding to see what can be negotiated. It is also  worth a call to your bank if you have bank loans to see if they are prepared to put repayments on hold for a period of time – we are finding that lenders are more prepared to listen and assist then they perhaps would be in normal circumstances!
  • Where businesses are in financial distress and have outstanding tax liabilities, they can receive support with their tax affairs. HMRC have set up a dedicated COVID-19 helpline for those in need and they may be able to agree a bespoke “Time to Pay” arrangement.
  • HMRC have also delayed the introduction of “Off-Payroll” rules (IR35) to the private sector until the 6th April 2021.
  • The Government is shortly to announce an “Employment and Wages Subsidy” and we await these details
  • Companies House have indicated that they will allow extensions to the filing deadlines for accounts. The extension needs to be applied for but will automatically be granted for 2 months

HMRC COVID-19 HELPLINE: 0800 0159 559


For advice and support for your business today, call us on 01494 422742

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