As the COVID-19 crisis is escalating, companies are having to act fast to minimise the impact on their business.
Begbies Traynor has provided guidance below that businesses can follow to survive the challenges over the coming months:
Talk to your business support network
- Your business insurance might provide the cover you need if your business has to stop trading indefinitely. Check your policy wording as you might have Business Interruption cover in your commercial insurance policy – speak to your insurer if you are not sure.
- Talk to your bank about possible emergency finance options. The British Business Bank has set up the Coronavirus Business Interruption Lending Scheme which will provide your lender with a government-backed 80% guarantee against the outstanding facility balance. And the Bank of England has set up the COVID Corporate Financing Facility (CCFF) to provide short-term funding for larger corporations.
- Ask your customers – particularly larger companies – to pay your outstanding invoices.
- Talk to the Government through their business support helplines, some of which are dedicated to COVID-19.
- They have implemented a number of support schemes, such as:
- The Coronavirus Job Retention Scheme to help retain staff when a business has been forced to stop trading.
- Companies will now be able to reclaim Statutory Sick Pay (SSP) that has been paid to employees for up to two weeks.
- Grants for SMEs – Non-repayable cash grants will be made available to help those in the retail, leisure, and hospitality industry. Many smaller businesses outside of these sectors will also be entitled to a government grant
- Ask your landlord for some breathing space if you are experiencing a drop in trade which is impacting on your ability to pay the rent.
- Contact your local council to discuss business rates such as a temporary payment holiday.
Get free professional advice
- Talk to a ‘Time To Pay’ specialist who can defer your tax payments to HMRC. HMRC has already announced that they are waiving late payment penalties and interest for missed tax payments, but you should make every effort to get Time To Pay in place rather than assuming the Revenue will provide automatic breathing space.
- HMRC advice – including the deferral of the upcoming quarterly VAT payment for businesses, and the deferral of Self-Assessment payments for the self-employed. It has been confirmed that these payments, which were originally scheduled for 31 July 2020, will now not be due until January 2021.
- If your business is experiencing a downturn in trade, restructuring your business operations could provide more time going forward to get back on your feet. Mitigating losses is key in times of financial distress, so take advice on which parts of your business could be streamlined or cut back.
- There are also formal procedures available to companies in the form of a Company Voluntary Arrangement (CVA) which shields businesses from creditor pressure and allows them to settle unpaid debts over time.
- Emergency funding can help businesses navigate through troubled waters. There are many different funding options available – such as bridging loans, extended overdrafts and invoice factoring.
- Directors should also take extra care not to create individual financial exposure through overdrawn directors’ loan accounts and late payments that can breach personal guarantees.
- Take time to understand the options available to you and your business if cash flow worsens and the business becomes insolvent, which means there are insufficient funds to pay bills as and when they fall due. Speak to one of our licensed insolvency practitioners completely free of charge and find out what options might be available to you.
Free business rescue and recovery advice from Begbies Traynor
UK businesses are facing a challenge like no other; the COVID-19 pandemic presents a huge threat to livelihoods across the country. Business distress is accelerating on an unprecedented scale and taking swift action is absolutely critical.
For further information or advice, please contact:
Kenny Craig M: 07446 947567
Ken Pattullo M: 07786 951511
Thomas Mckay M: 07980 837146
Simon Watson M: 07432 559945