Managing the impacts of coronavirus: 10 expert tips for business owners
2020-04-17 - 02:02
Article published by: ATT
The Insolvency team from leading legal firm Aaron & Partners have produced a guide aimed at helping UK business owners to navigate the current economic climate in relation to Coronavirus (Covid-19).
Senior insolvency solicitors at Aaron & Partners, Mark Davies, and Jan Chillery, who are both listed in the industry’s coveted Legal 500 rankings have put together the advice based on an influx of questions from businesses and more than 30 years’ experience of managing insolvency cases.
Damage limitation for businesses
Mark said: “The impact of Covid-19 is projected to be very significant and although health concerns rightly trump all others, many business owners are now having to assess the damage this could have on their business and livelihoods.
“As a business owner, it’s vital to move quickly and take the necessary steps in order to give your business the best chance of surviving through these uncertain and unpredictable times.”
To offer some help and guidance, here is a list of tips for business owners, highlighting considerations and best practice advice that should be adopted now.
- Adopt a laser-like focus on managing cash
This means understanding the current position and preparing cash flow forecasts, then monitoring the position regularly. Decisions may need to be made as to which are business-critical payments and which are not.
Many will be able to produce their own forecasts, particularly with modern accounting software. Others will need specialist assistance and your accountant is a good starting point.
- Keep up to date with Government announcements
This appears to be updated literally on a daily basis, however at the time of going to press the Government has announced the following::
A package of measures to assist small businesses such as:
small business grant funding of £10,000 for all businesses in receipt of small business rates relief, or rural rate relief
grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value of £15,000 to £51,000
Covid-19 Business Interruption Loan Scheme offering loans of up to £5 million for SMEs
Covid-19 Corporate Financing Facility, a new lending facility from the Bank of England to help support liquidity among larger firms, helping them to bridge disruption to their cash flow from loans.
Covid-19 Job Retention Scheme, available to all employers. This includes cash grants of up to 80% of wages for each employee not working due to Coronavirus issues (up to £2,500 per month).
Deferral of VAT due in the next 3 months to the end of the year.
12 month business rates holiday for all retail, hospitality, leisure and nursery businesses. This by no means an exhaustive list and we anticipate further announcements will be made.
- Seek support from your bank
Traditional banks have experienced teams of relationship managers which take control when their customer becomes financially distressed. In our experience, these tend to be supportive, provided they are approached at an early stage.
- Consider the Tax liabilities
Tax liabilities can be an issue for many businesses. HMRC has always been willing to consider a Time To Pay arrangement in a suitable case and HMRC is scaling up this service.
If you’re self-employed, the Chancellor has recently announced deferral for self-assessment tax payments to January 2021.
- Be aware of the support available
Business owners may be able to handle their own negotiations with creditors, including Time To Pay with HMRC. However, there are specialist Time To Pay advisers who use their experience to best position a request and have considerable success.
- Review contractual terms with suppliers
During these times, relations with suppliers can quickly become strained. The contractual terms may need to be reviewed to see if they permit room for maneuver. Irrespective of the parties’ legal rights usually there will need to be a dialogue to see whether both sides can agree on a way forward.
- Communicate with creditors
In our experience, it pays to keep the lines of communication open with all creditors. This doesn’t mean telling them everything, and indeed that can be counterproductive. If there is or may be an issue then it is better to raise it sooner rather than later.
- Always take advice from qualified specialists
There are a number of options to be considered if the business is insolvent, and it is often possible to preserve value and jobs if matters are looked at early enough. We recommend seeking advice from those who specialise in this area of work. Beware of unlicensed advisers.
We foresee the business community adapting its practices and being accommodating where it can. There are already stories of large businesses paying suppliers more promptly: this will make a significant positive difference to suppliers’ cash-flows.
Flexibility on all sides and a collaborative approach, based on honest communication, will go a long way to preserving businesses and therefore jobs.
“MANAGING THE IMPACTS OF CORONAVIRUS: 10 EXPERT TIPS FOR BUSINESS OWNERS of the “ THE ASSOCIATION OF ACCOUNTING TECHNICIANS”, published by the International Federation of Accountants in March 2020 in the English language, has been translated in the Albanian language by SCAAK in April 2020, and is used with the permission of IFAC. The approved text of all IFAC publications is that published by IFAC in the English language. IFAC assumes no responsibility for the accuracy and completeness of the translation or for actions that may ensue as a result thereof.
English language text of “MANAGING THE IMPACTS OF CORONAVIRUS: 10 EXPERT TIPS FOR BUSINESS OWNERS” © 2020 by IFAC. All rights reserved.
Albanian language text of “MENAXHIMI I NDIKIMIT TË KORONAVIRUSIT: 10 KËSHILLA EKSPERTËSH PËR PRONARËT E BIZNESEVE” © 2020 by IFAC. All rights reserved.
Original title: MANAGING THE IMPACTS OF CORONAVIRUS: 10 EXPERT TIPS FOR BUSINESS OWNERS
