As the country braces local lockdown restrictions and a national curfew limiting the trading hours of pubs, bars and restaurants to mitigate the spread of the virus, many businesses have been instructed to close, and a number have voluntarily opted to shut for the safety of their workforce until further notice. The coronavirus pandemic continues to disrupt trade across every sector, pushing ailing businesses without enough financial support into decline. As the economy slowly recovers from the effects of Covid-19, the virus continues to pose a threat to businesses, cutting away supply chains and disrupting company growth.
The team behind UK Liquidators, part of Begbies Traynor Group, have produced a five-step checklist for company directors to assist in conducting a business health check upon returning to work. As coronavirus pressures batter down on the economy, we highlight which areas of your business to cast a close eye over, and rescue strategies to consider if your business is experiencing financial distress.
- Check-in with your supply chain
Trading restrictions as a result of Covid-19 have led to the collapse of supply chains, impacting service fulfilment and therefore, customer service levels. Make a courtesy call to key suppliers to inform them of your reopening and request a service update. If they are unable to fulfil your requirements due to significant service delays or increased consumer demand, this gives you enough time to source an alternative service provider. If your supplier is insolvent, this could jeopardise your ability to fulfil orders and increase the likelihood of bad debt.
- Reaffirm position of company finances
If the growth of your business is restricted due to poor cash flow and a lack of retained profits, exploring finance options to fulfil your short-term/long-term requirements may be an ideal next step. If your business has the potential to drive more customers to the door, explore your commercial finance options to bridge any gaps in income. Keep in mind current trading uncertainty as failure to make repayments could lead to major repercussions, threatening the future of your business.
- Future of employees
If your business can no longer maintain employee wage payments, accessing support from the Job Support Scheme can help preserve viable jobs, fighting away the prospect of redundancy. Understand the financial contributions you will be required to make as if you are unable to commit to this, conducting company restructuring may be your next option. Consumer demand is likely to significantly fluctuate in light of Covid-19 so it is vital to regularly review your position and staffing requirements.
- Financial commitments
Review your financial commitments, such as business maintenance costs, company liabilities, and debt repayments, in line with your forecasted income and cash flow. If you are unable to fulfil payments and are on the receiving end of creditor pressure, you may consider entering a Company Voluntary Arrangement (CVA) to divide your payments into affordable instalments. A Time to Pay Arrangement with HMRC can also help restructure tax liabilities, lightening the financial burden on your business.
- Restructuring and recovery options
If the coronavirus lockdown has impacted company cash flow and your balance sheet, seek advice from your accountant to ensure that your business can withstand the further tightening of Covid-19 measures. After carrying out your business health check, conclude if you can continue trading with ease. If your business requires external support to maximise your chances of survival, contact a licensed insolvency practitioner.
As businesses fight to stay afloat during the coronavirus pandemic, UK Liquidators are on hand to help you make a cost-efficient exit if your business has extinguished prospects of recovery. Our dedicated team of licensed insolvency practitioners across the UK, including Liverpool, Lancashire, Manchester, Leeds, and Birmingham can provide urgent support, advising you on insolvency and restructuring solutions.
