The pandemic has come with a number of challenges. Some of your clients would have flourished as they adapted and tailored their offerings to new markets or new delivery channels. Others have had little choice but to focus their activities on survival. As the restrictions lift further, there is uncertainty on how the world around us has changed and if those changes will remain into the longer term.
Our Recovery Solutions team can help with the financial challenges your clients may encounter. The next three months will be critical to the survival of many.
Here are our top considerations to help businesses make smarter decisions:
Deferred payments to HMRC, lenders and landlords may shortly fall due for payment. Negotiations with these stakeholders may be required to agree payment plans for the arrears and settlement of ongoing liabilities.
Companies must establish whether they have sufficient funding to carry out their business plan (and any revisions), establishing funding gaps, affordability and sources of extra funding.
Furlough contributions by businesses are increasing and it may be necessary to reduce staff numbers. Businesses should review compliance with furlough rules and make early disclosure to HMRC if funds have been incorrectly claimed (or risk substantial penalties). Redundancy payments may need to be made creating further financial stress on cashflow.
The temporary suspension to the wrongful trading rules came to an end on 30 June 2021. Directors should consider the pitfalls of creating a personal liability for not acting in a company’s best interests and continuing trade when insolvency is unavoidable. They should also consider whether they have provided personal guarantees which may be called upon.
For clients under financial distress, the best advice is to recommend that they seek early advice from an Insolvency Practitioner. The recovery options available to businesses are wider at an early stage than if left too late. Talking to an Insolvency Practitioner does not mean that a business will end up in an insolvency process. The foremost intention of an Insolvency Practitioner will be to try to save a business.
For more information on each recovery stage, click the appropriate link below: