A leading Cumbrian accountancy firm has issued advice to businesses tackling the coronavirus to look at their cashflow.

Armstrong Watson, which has offices across the county, says the Government's steps to help firms is welcome.

However, it said because there is little clear guidance around how firms can access funds from the £330 billion made available by the Treasury, businesses should consider it carefully.

It added that taking action to establish the effect of Covid-19 was a sensible thing to do, but warned against making knee-jerk decisions.

It said: "Taking measured steps will help maintain consistency. Reviewing the cash implications on your business early will help you to weather the potential storm."

Daryl Warwick, Armstrong Watson Carlisle partner, said: “If other countries are anything to go by, it looks like there might be an enforced lock down in the not too distant future.

"This will impact all different sectors, not just those that are suffering as a result of the social distancing guidance from the Government.

"The impact is likely to manifest itself across the whole supply chain, from an inability to access stock to complete work in progress, to issues getting paid.

“A fall in turnover or receipts is likely to result in an additional cash requirement during this period and lenders have been vocal in their willingness to continue to offer additional funding lines.

“However, due to the uncertainty with regards to how long this situation will last, it is imperative that you take a step back to work out exactly how much your business is likely to need, in a number of different scenarios, before signing up to an additional credit line, especially if personal guarantees have been requested.”

Preparing a short term and medium cash flow forecast will help to plot the peaks and troughs from a cash perspective, in different scenarios, Armstrong Watson said.

The exercise will in turn highlight any cash holes in a business.

Once the pinch points have been identified, an exercise in “smoothing” can be carried out, where larger monthly payments are reviewed to ascertain whether they can be broken down into more manageable chunks for a short period so that the cashflow is more consistent.

Armstrong Watson added that if businesses need additional cash, their first call should be to their existing funder.

It added: "Their rate of borrowing is likely to be more favourable than the alternative lenders and a quicker option too.

"We also anticipate that there will be some additional grants available, which will aim to assist businesses without requiring any additional security from directors personally."