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How to protect your business in a post covid world

How to protect your business in a post covid world

How to protect your business in a post covid world

Turnover is vanity, profit is sanity but cash is king for your business.

Many of us have felt the squeeze that Covid has presented to us when it comes to keeping our business bank balances healthy. The phrase above rings true for any business. The true measure of a business’ financial health status is cash. Without cash, purchases cannot be made, debts cannot be settled and dividends cannot be paid to shareholders. Cash reserves are important. It’s useful for businesses to have a “rainy day” fund to cover unforeseen events or having a fund to invest in new infrastructure. A business may have all the revenue in the world but if they don’t have the ability to generate cash, the business can easily fail.

So what can you do to ensure that the cash continues to flow and effectively avoid bad debts.

Here are my top tips for doing that:


Write it down

The first and potentially most important recommendation is to have the commercial relationship between you and your customer, set out clearly in writing. Ideally you would have some form of commercial agreement or terms and conditions, setting out what each of you expects from the other, what the payment terms are, how much is to be paid for the goods or services, what happens on late or non-payment and how you can terminate the relationship and still recover any unpaid sums.

In the fast paced world of business, it is easy to overlook the importance of this step. Oral contracts are enforceable, however it is so much easier if the parties have the terms written down or communicated between them. At the very least, get the terms into an email.

Scores on the doors

The next recommendation is to perform simple credit checks on the business entity to ascertain what its credit rating is. This is  particularly useful with new potential customers to your business however I recommend doing it every twelve months or so. Doing this will help to inform you whether you want to establish or maintain a business relationship with the customer and if so, on what terms. It will also help you to avoid getting into or continuing commercial relationships with failing businesses.

Show me the money

Consider whether or not to take an upfront deposit from the client or customer prior to working with them. They shouldn’t have a problem with this as long as the amount is reasonable and their intentions are honourable.

Communication and Relationships

Maintain frequent and open communication with your customers. Make sure that you manage expectations. Did you fulfil your obligations? Is there a query or dispute over the invoice? Did you raise the invoice in the correct way for the customer e.g. following a purchase order? You’d be surprised how many times an unpaid invoice is down to a simple misunderstanding. If the invoice isn’t paid, check all that first before you go chasing the debt and definitely don’t send angry communications. That only serves to aggravate a situation unnecessarily.


I've already got an unpaid debt - what do I do?

And if it goes wrong and you have an unpaid debt, these are my recommendations to follow up:

  1. Keep the lines of communication open with the customer. Try to establish a reason why payment is late. Is it a temporary cashflow issue for them? Or is it more terminal than that? Is it actually an easily rectified situation with a sensible conversation?
  2. Consider whether you want to pause work for the customer until the outstanding invoice or invoices are settled – but be careful that you don’t put yourself into a breach of contract situation by doing so.
  3. Consider getting a professional involved at an early stage (e.g. accountant or solicitor) to open communication with the debtor.  This doesn’t have to involve formal legal action at this stage. Just a simple telephone call or email. Sometimes such an approach can focus a business’ mind to the importance of paying outstanding debts or least agreeing a repayment plan.
  4. If all else fails take a more formal step like sending a letter before action (formal notice of intended legal action) or instructing a debt collection agency (after 30th September 2021 (date subject to change - The Corporate Insolvency & Governance Act 2020) you can consider serving a statutory demand to secure payment).


There are so many options available to a business to better protect its future and so many options for resolving a dispute without the need for formal court action.

If in doubt. Ask. Ask your accountant. Ask a solicitor. Don’t leave it. Protect your business and set yourself up for success. Don’t let cashflow issues be the reason your business fails.


Blog by Hooper Hyde