Helping your business through the current COVID 19 pandemic
The COVID 19 pandemic is adversely affecting businesses worldwide. Whilst some businesses may have adequate financial reserves to see them through the unprecedented challenges we will all now face, others will not be so fortunate. It appears likely that the UK’s small business network in particular will be at proportionately greater risk. For many smaller businesses, cash flow difficulties are the everyday norm and sadly, for a proportion of those, this unprecedented situation may well prove to be a tipping point.
The business landscape is changing on an hourly basis as facts emerge and guidance changes and that uncertainty is likely to continue for some time to come. Accordingly, whilst we appear to be at the very early stages of the pandemic, a number of businesses are already showing signs of distress as a result of the impact of COVID 19 on supply chains, staffing and a general downturn in discretionary spending. Clearly lenders, landlords and stakeholders will be understandably concerned about the future viability of those businesses.
It is not too late to try to mitigate the effects of the pandemic on your business by drawing up or reviewing an existing business continuity plan. The principal aim of such a plan should be to attempt to ensure that you maintain adequate cash flow to keep the business afloat against a backdrop of falling demand.
In the Budget last week, the Government announced a number of measures to support smaller businesses which include:
- a business interruption loan scheme;
- assistance with and the relaxation of the rules around statutory sick pay;
- a dedicated telephone helpline to help businesses and self-employed individuals in financial distress with outstanding tax liabilities which includes the ability to agree bespoke time to pay arrangements;
- local authority grants; and
- a temporary increase in the business rates discount to 100% for premises below a certain rateable value.
The devil will of course be in the detail which is largely still to be published.
Like never before, regular communication across all aspects of your business both internally and externally will be of critical importance. We recommend that you speak with your key customers and suppliers to find out what procedures they have in place for business continuity. You may wish to consider options for sourcing supplies from a number of different suppliers. Insurance policies should be reviewed to ascertain whether you are covered for any losses you may incur and communication channels should be opened with your IT support provider to ensure that your business is able to continue to some degree through remote working if necessary.
If your business is facing cash flow difficulties, it is essential to explore all options and, if appropriate, to speak with the bank at an early stage to explore the possibility of an emergency loan and/or an increased overdraft. If your ability to pay rent is compromised, communication with landlords will be key as the March quarter day approaches.
Seeking urgent advice from insolvency professionals at the first sign of difficulties is of crucial importance and will very often mean that there is a wider range of solutions available to you, thereby enhancing the prospects of continuity of the business in some form.
We are here to offer advice and assistance through these turbulent times. If you wish to discuss any aspect of insolvency personal or business or any issues arising from this article, please contact John Bradshaw or Sarah Mower dedicated insolvency specialists in our Insolvency & Business Recovery Team.
John Bradshaw is a partner and specialises in Insolvency & Business Recovery at Barker Gotelee Solicitors.