Why leaving funding too late will store up problems

Bored of the adage 'If you fail to plan, you are planning to fail'? You're not alone. Sadly, truisms - much like a parent's advice - tend to be worth heeding. When it comes to funding, it's best to do it well in advance. Too many companies leave it until there's a cashflow crunch before acting. As trusted advisers, accountants need to play the role of parent, use their wisdom to identify future funding opportunities, model a couple of scenarios, and help clients find a source of finance that doesn't leave them with unfavourable terms.

Government funding schemes alone will not stop some businesses from facing further financial strains as we move beyond lockdown 2.0 and into the new tougher tiered system. Now is the time to understand the entire funding landscape.

How to model for keeping the business above water and trading through the winter

There will always be an unlimited number of variables when it comes to scenario planning, but a general rule in these difficult times is to plan for the worst and hope for the best. The numerous Government schemes have certainly helped businesses get cash in the bank and keep their head above water, most notably the initial Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS).

As we see the rise of circuit-breaker lockdowns taking hold across the UK, businesses will be planning for the worst once again and taking advantage of the CBILS extension is something you should be advising all your clients to do. It goes without saying that no company should be borrowing beyond their means, but the extension to apply for the CBILS to the end of January will be welcome news for many businesses.

Looking back over pre-COVID financial modelling will offer less guidance, now that the way we live and spend has been turned on its head, but it’s important to map out the most likely scenarios based on the client data you currently have. We’re now eight months into the crisis and by reviewing data on a constant basis, there will be opportunities to streamline and build a clearer financial picture.

This scenario planning enables businesses to allocate resources to value-add activities and reappraise their business, which in turn opens up their funding options for the coming months.

Changes to the way you staff

When lockdown first hit, every company adopted a worst case scenario. As we think about the future, businesses across the UK will have a greater understanding of their financial situation and the levers that can be pulled when necessary to shut down the outflow of cash.

The UK’s economy has shrunk by 20% in the last quarter, with over 700,000 job losses since March. With no end yet in sight and further disruption to businesses in the run up to Christmas, evaluating headcount and modelling for the end of the furlough scheme needs to happen now.

Firms that are told to shut because of coronavirus rules over the winter will receive at least 67% of their pay from the government through the Job Support Scheme, which replaced furlough at the start of November. The scheme itself will provide a vital lifeline for many, but with less generous terms. Accountants must be thinking about how their clients' financial modelling must change in order to fill the gap as trading for many businesses has stopped once again.

It’s not necessarily bad news for all. Some companies may even have the ability to start hiring in order to expand their business. It’s important to demonstrate how hiring projections will impact cashflow and what funding options there are to support that expansion. When hiring someone new, there’s obviously going to be an enlarged payroll and the performance from the new hire won’t necessarily translate immediately into greater productivity and profit. Depending on the role and the level of training required, this needs to be factored in over a period of months.

Growth through new opportunities

The market has shifted during the pandemic, which in turn has meant that staying agile or adapting is vital for businesses. In order for your clients to explore these new markets, accountants must think about the right type of finance to suit these changing circumstances.

This is where traditional asset-backed lending may come into play. Those businesses with machinery, equipment, vehicles and property are well positioned to raise finance in a market where unsecured loans may become harder to access.

The National Audit Office figures suggesting £26bn of the £38bn of Bounce Back Loans may never be repaid due to criminal activity and company failures has left many small businesses with fewer funding options. Additionally, some businesses may have already exhausted their access to government-backed loans during the summer lockdown.

With asset-based lending there is a greater level of security for lenders in a worst-case scenario and a lot of businesses can use these assets to acquire the funds required to channel into new endeavours.


We’re still in this for the long haul and as we move towards a tiered lockdown system across the UK, it only highlights the need for your clients to explore all the funding options available to them, such as a Merchant Cash Advance for a retailer.

It starts with modelling scenarios, leads to finding pre-qualified funding options with them, and ends with cash in the bank and a client with a better chance of survival and growth. Make sure the bank isn’t their last port of call!

Startup Details

Startup Details



Fluidly’s Intelligent Cashflow software produces accurate financial predictions in minutes, enabling businesses to plan ahead with confidence, find relevant funding products when they need it, and offer information and advice on business challenges. It works with hundreds of accounting practices and tens of thousands of connected businesses.

  • Headquarters Regions
    London, UK
  • Founded Date
    Oct 1, 2016
  • Founders
    Caroline Plumb, Johnnie Ball
  • Operating Status
  • Number of Employees