Lockdown is bad for business...obvs

Cashflow and cash in the bank is how Smes survive. 

lockdown instils fear into everybody and fear is the most powerful external force on our human race. 

Announcing lockdown instantly triggered the Finance bods of Britain’s SMEs, to communally shit their pants about cash flow. 

Most businesses owe some money to other businesses but at the same time, are also owed money by others. 

Balancing this equation is called cashflow and is responsible for the survival of the business and the jobs of everyone employed by the business too. 

It’s a nightmare job, incredibly stressful and subsequently all finance managers I’ve worked with are brilliant at managing fear. 

But in lockdown. With no certainty about anything. A global pandemic. The worst recession in history upon us. FMs will naturally and quite rightly err on the side of caution. This fear is real - they mustn’t let their business fail. 

They worry if I pay these people and I don’t get paid by these people then our cashflow plummets and our risk of failure soars. 

So they wait until their bills are paid before paying theirs. 

But every finance manager in an SME is suffering the same fear and therefore the chain snaps. And cashflow doesn’t flow. 

I saw this before in lockdown one when incoming cash dried up overnight for four very long months. 

Despite the unbelievable strain it put on our business and me personally, I’m not angry about it. (I was for a while but I woke up). 

For an SME, paying a bill and reducing their cash nest egg, instantly increases their risk of failure. They have fixed costs outgoing and less money to pay for them. Their survival rate reduces. 

(The company survival rate (S rate) is the cash in the bank divided by monthly fixed costs) 

So I get it when people don’t pay, delay pay, go quiet, put in more layers of sign off, ask for instalments, etc etc. 

I get it. I understand. And I can be kind about it. 

I always know my own S rate. I always know how much cash we have in the bank. I can influence the cost element. I can manage my own companies survival. I can make a judgment on my debtors S rate too. And I can make a decision on what is best for both of our survival. 

We work in partnership and I want to continue to work with them over the long term. If they don’t survive then i can’t work do that. 

So if you’re responsible for paying the bills for your company, Are you going to be brave or let the fear control you? 

Fear leads to hate. Hate leads to anger. Anger leads to suffering. 

(I always saw it slightly differently to yoda)