08 July 2020
Although the coming years and months remain uncertain, businesses across the UK are determined to create a resilient plan for the future.
There are challenges on multiple fronts as companies fight to safeguard their operational viability, while protecting the safety of their workers, especially as businesses reactivate post-lockdown. This is a balancing act, and one we will continue to support our customers with. However, there are simple steps businesses can take to manage their own expenses and those of their employees that will help deliver long-term resilience.
During the peak of lockdown, more than 70 per cent of fleet managers had fewer than 1 in 10 company car drivers still driving for work, while more than 90 per cent of van drivers remained at home. Despite many sectors now being given the go-ahead to return to work while practicing social distancing, the recovery from COVID-19 won’t be instantaneous.
That isn’t to say the recovery hasn’t already started. Our Allstar Business Barometer reveals that UK businesses drove an additional 1.53bn miles in May compared to April showcasing the level to which businesses are reactivating, scaling up operations and getting their fleets back on the road. Unsurprisingly, the scale of recovery has differed from sector to sector. While there was a 22.6% increase in fuel consumption across all businesses, the sharpest rises were seen in those areas most impacted by the initial lockdown – arts, entertainment and recreation, education and hospitality.
Reactivation and resilience go hand-in-hand as short-term decisions to get back to work seek to build towards longer-term strength and confidence. Making the right choices when it comes to managing company cash flow will be vital here.
Three ways to strengthen your cash flow
Although the road to resilience won’t be one-size-fits-all, for business owners and fleet managers alike, reactivation will certainly involve controlling expenditure wherever possible and preparing for changes in policy and to the economic environment in the coming months. While reduced business expenses and fuel costs may have helped many in the short-term, companies now scaling up again need to factor back in a number of operating costs. Strengthening company cash flow will help with this and there are three key areas to focus on:
1. Remove your reliance on cash
Although cash reserves can provide a reliable cushion to manage unexpected costs, it’s not always easy to build this safety net up, especially after a long period of inactivity. If your business finds it’s constantly battling with unexpected urgent costs that force you into an overdraft, or you’re worried this may become increasingly likely post-lockdown, then consider adding a credit-based solution to your repertoire. For example, the Allstar Plus business credit card has an interest-free repayment period of up to 44 days, enabling your company to manage cash flow effectively by consolidating everyday costs into a regular, more transparent payment.
2. Avoid pay and reclaim expense policies
Asking employees to pay and reclaim company expenses may be an appealing prospect from a P&L perspective but it can negatively impact staff productivity. Our research shows that 57 per cent of professionals have endured financial hardship after shouldering the burden of work expenses, while more than a quarter (26%) have decided to change jobs as a result. At a time when families up and down the country are particularly feeling the pinch, using fuel cards that bill the company directly rather than asking employees to be out of pocket throughout the month will go a long way to supporting driver wellbeing while simplifying cash flow management for your business.
3. Get a clear picture
Many companies struggle to fully understand day-to-day expenditure across the business and employee base. This can become a major issue when financial planning in advance of scaling up after a period of inactivity. Your cash flow is only as good as your accounting and reporting, so ask yourself if you have the right software and expense management processes in place to provide your business with the full picture. This will allow you to zero in on areas for improvement, such as using pence per mile calculators to identify and monitor inefficient, high risk or uneconomical drivers.
Following these steps will go a long way to help your company strengthen its cash flow and increase business resilience in the wake of the lockdown. Whatever your company size or situation, we’re here to help you on your journey.
Find more top tips on how to optimise your cash flow and future proof your business here.
Allstar supports business resilience
At Allstar, we are here to support our customers, particularly when it comes to planning for the road ahead. To assist our customers, we will be producing a series of resources to support you as you make your way back on the road, providing practical and useful guidance at every turn. Sign up to the Allstar Insights Newsletter to stay updated on the ways your business can ensure it is resilient for the future.