Coronavirus Advice for Businesses

The current pandemic caused by coronavirus (COVID 19) has affected the whole world negatively and a lot of businesses in the UK are taking swift measures to prepare for its long-term impact.

Most partnerships, companies, and sole trader businesses lack the financial capabilities to handle emergency cash flow situations – a threat lots of businesses in different sectors and industries across the globe are facing as a result of COVID-19.

The question is, how can your business deal with the financial impact of this pandemic?

 

Contact your business support network and seek professional advice

Check your business insurance

If it gets to the point your business needs to halt trading indefinitely, you may receive the cover you need from your business insurance. Go through your policy wording, it’s likely that your commercial insurance policy provides cover for Business Interruptions ­– you can contact your insurer if you are not sure what is included. After confirming that your insurance policy covers Business Interruption, you need to check if there is an extension for “notifiable diseases.”

 

Get your outstanding invoices settled

Ask your customers, especially bigger companies, to settle outstanding bills/invoices. Those who are self-employed, as well as small businesses with invoices issued, should seize this opportunity to request instant payment.

 

Speak to your bank

Contact your bank concerning possible emergency finance options. The British Business Bank has set up the Coronavirus Business Interruption Lending Scheme; this scheme will offer your lenders a government-backed 80% guarantee against outstanding facility balance – making finance available for any type of business.

 

Look into your lease

If you are unable to pay rent due to a drop in trade, you can ask you landlord to ease up a little. Giving the effect of the current pandemic, your landlord may be generous enough to offer payment discounts or rent breaks.

 

Understand your options

Carefully understand the options available to you as well as your business if there is a problem with cash flow and your business becomes insolvent – inability to pay bills (HMRC/suppliers) when due. You can contact us for free to identify possible options available to you and your business.

 

Defer HMRC payments if possible

Contact a HMRC ‘Time to Pay’ specialist who is capable of deferring your tax payments to HMRC. Companies usually find it difficult to pay tax, VAT, or PAYE when faced with cash flow problems. Fortunately, HMRC announced waiving penalties for late-payments and mixed tax payments interest; however, you need to put effort to receive Time to Pay instead of assuming that the revenue will offer a breathing space automatically.

 

Government helplines

Reach the Government via its business support helplines – some of these helplines are committed to COVID 19. Their services are designed to offer small businesses advice or instructions on how to cope with or minimise the coronavirus impact. The phone numbers are as follows depending on the location of your business:

• England: 0300 456 3565
• Northern Ireland: 0800 181 4422
• Scotland: 0300 303 0660
• Wales: 0300 060 3000

Ensure you seek advice if you start experiencing problems with cash flow due to the coronavirus outbreak and your business is served with non-payment notices like statutory demands, CCJs, or a winding-up petition (in most serious scenarios). Formal notices like these are usually liquidation precursors, and you need to act fast.

 

Investigate restructuring your business

Restructuring your business operations can help your business bounce back as time goes on if you are experiencing a drop in trade. When faced with financial crises, mitigating losses is crucial; thus, you need to identify areas of your business you need to cut back or streamline. Consider contracts and subscriptions that are not really relevant, something you can currently do without.

 

Formal insolvency procedures

Formal procedures, like a Company Voluntary Arrangement (CVA), are also available to companies. This arrangement helps to reduce pressure from company creditors and offer the business more time to pay debts. The CVA is a restructuring procedure that creates an Administration that shields a company as well as the company creditors from more losses and is designed to resuscitate the business, ensuring the continuation of employment and trade.

 

Emergency funding

One of the ways a business can survive financial distress is through emergency funding. There are different funding options you can choose from and you can reach us for advice (Free of Charge) to know which option is suitable for your business. Some of the available funding options will require a type of security and others may be offered as an old-fashioned capital loan. In the months to come, the demand for bridging loans will be on the high side. Invoice factoring will be crucial for any business that wants to recover outstanding invoices – usually at about 80-85% of their value. Also, the Coronavirus Business Interruption Lending Scheme is available; the Government has extended this scheme so that all viable small businesses affected by this pandemic, not only businesses that cannot secure regular commercial financing, will now be eligible if they need funds to continue operations during this difficult moment. Also, the Government is stopping lenders from demanding personal guarantees for loans below £250,000 and setting operational changes to accelerate lending approvals. Interests and fees for the first 12 months will be covered by the Government.

To avoid breaching personal guarantees, company Directors should be careful not to create individual financial exposure via overdrawn director’s loan accounts and late payments. Directors or business owners are likely to take funds from the company’s purse with the intention to pay back later – but the unexpected events we are facing at the moment may prevent a smooth repayment, which could cause corporate and/or personal insolvency problems, like bankruptcy or IVAs.

 

Liquidation as a final resort

Lastly, if your company is faced with insolvency and the only way out is to liquidate, the directors of the company can obtain a free assessment for possible director redundancy pay; the average payout for this is about £9,000.

 

Free business rescue and recovery advice from Forbes Burton

At Forbes Burton, we have experts that can provide free advice and support. So if you want advice on any area of business rescue, turnaround, and recovery methods, you can count on us. Call us on 0800 975 0380 for a free confidential discussion with our experts.

If you want a face-to-face meeting we offer virtual meetings via Zoom, Microsoft Teams, and Skype.

The COVID-19 outbreak presents a constantly moving picture and information and advice from the Government can change very quickly.

For all the very latest Government information on COVID-19 and guidance for businesses, please visit the UK Government website, the Scottish Government website, the Welsh Government website, or the Northern Irish Government website.