COVID-19 & Cashflow

A week into lockdown, with two more to go, and the government already warning that it could be extended, many businesses are facing a cashflow crisis.


It is publicly acknowledged that, compared to other economies, the level of aid provided by the South African Government to the business community and employees has been disappointingly low.

The old saying that you aim to make a profit, but survive on cashflow, is truer than ever.


Below is some practical advice as to what you can do to prepare yourself, where to find money, how to apply for financial assistance and what your banks are offering you.


Plan for the worst, hope for the best

Take a good look at your latest management accounts and cashflow reports and assume you are not going to get paid for a month, or two, or three. What is your breaking point? Now let’s start from there.


Revenue management

Get in touch with your customers and understand their cash position. Find out if you will be paid at the end of this month? A part payment is better than no payment at all. Now add up all the projected inflows for the next month to three (if you can).


Monthly overhead assessment

Calculate your monthly minimum overhead: start by taking your current month end payment run and do what your customers just did to you. Call your suppliers and negotiate payment terms. A part payment is better than full payment. Aim to ideally defer or reduce your month end payment run to the lowest possible number.


Next, address your biggest overheads, usually people and rent.


Rent – the easier part.

If you have been locked out of your premises owing to a government dispensation and you cannot trade, you have a very good case to negotiate a reduction or deferment in rental for the lock down period. This can be spread over a few months or added to the end of the lease (extending it).


People – a much harder subject.

This is obviously a sensitive area and you have a few options here – from full retrenchments, paid annual leave and short time. Owing to the complex labour legislation, we would advise that before you do anything, you reach out to your HR advisor or contact our HR Solutions Team.


In terms of other creditors and suppliers.

Negotiate, negotiate, negotiate.


Cash reserves

How much cash, in current accounts, investments and unutilized facilities, do you have? Take this number and add to it your projected inflows. Then deduct projected monthly overheads. If you get zero you are in trouble, if you get number that takes you past a month, two or three you have just established your ‘breaking point’.


So now you know how much time you have before your business runs out of money.


Extending the breaking point

Now let’s work on extending your breaking point. This is the time where you turn to every possible government agency , bank, lender and supplier to further assist your business.

If your business has a turnover of under R50m you make use of the following;

·       SMME SA funding

·       Rupert Foundation funding (to be announced)

·       SARS deferment options

·       UIF ETI incentives

·       Sector specific funding (travel etc)


Various private and corporate funders are opening up their pockets to assist small business in SA. However, many of these mechanisms are not yet operational (4 April 2020). Our dedicated COVID-19 page will contain a list of all funding portals and will be updated on a regular basis.



Banks have come to the party (somewhat). As there was no central directive from the government, each bank has derived its own financial aid policy, with most of them running for a period of three months (1 April to 30 June) focusing on;

·       Instalment cashflow relief, during which part or no instalments/repayments will be due for a specific period;

·       A preferential interest rate;

·       No fees/ lower fees charged for any relief granted;

·       Assistance with processing credit insurance claims

·       Individualised bridging and debt relief facilities


We expect that, like government aid packages, these will be adjusted as COVID-19 develops. Our view is that you should keep one of these links on your favourite tab in your browser and look out for updates.


Don’t forget to speak to your banker directly, the earlier the better.


So now you know what to do and where to go to find cash, but how do your apply and what information do you need?


Most institutions, whether it be the banks, government institutions and other bodies usually ask for a similar set of information. So, don’t wait until the questions get asked, start working on compiling the following;

·       Last annual financial statements

·       Latest management accounts

·       Forecasted impact of COVID-19 on your cashflows

·       Three months bank statements for your trading account

·       Copy of your Tax clearance certificate

·       Copy of your BBBEE certificate

·       Assets and liabilities for the directors/shareholders

·       Latest rental statement

·       Employment statistics (what percent are SA residents)

·       Proof of employment of employees

·       Ownership structure to individual level


The bottom line is that the future of your business is at stake, and this is the time to be bold, act swiftly, involve your business partners, bankers, accountants, lawyers to find a solution that guarantees that your business is around after COVID-19 is long gone.


If you require assistance or clarification re any of the above, please don’t hesitate to contact one of our Partners.


Links to Bank Covid financial assistance pages




Standard Bank