The Welsh arm of insolvency and restructuring trade body R3 has issued an eight-point checklist to help owner/managers across Wales deal with the impact of the coronavirus pandemic on their businesses.
The organisation’s members, who include insolvency practitioners, lawyers, and turnaround and restructuring experts, work with business owners to mitigate and resolve the financial challenges they are facing, often without needing to resort to formal insolvency procedures.
R3 in Wales chair Philip Winterborne, who is a partner at Temple Bright solicitors, is urging directors to act quickly if they see issues arising, rather than ignoring them and hoping for the best.
“The pandemic has obviously had an unprecedented impact on large swathes of the regional economy, and even when the health implications have been overcome, the financial ramifications will very much still be there.
“By taking a planned, structured approach to dealing with what’s facing them, company directors will give themselves the best chance of both surviving in the short-term and thriving as time goes on.”
R3’s checklist for dealing with the business impacts of Covid-19 is:
– Form an emergency response committee: Agree who will decide how your business responds to changes in circumstances, new information and guidance from the Government and the health authorities, and changing customer needs.
– Know your cashflow: Make sure you have your cashflow figures to hand and maintain short-term weekly cashflow forecasts, so you can identify and prioritise outgoings.
– Begin negotiations with suppliers and/or creditors: Open negotiations to see if they will accept new terms or deferred payment plans if needs be. An upfront conversation with suppliers and creditors will give you a clear picture of what you need to pay, who you need to pay it to, and when you need to pay it by.
– Check your eligibility for Government support: The Government has announced a range of support measures for businesses, and a number of banks have also said they will look at business customers’ debts. Explore what you’re eligible for and how you can access it.
– Keep on top of employment contracts: Changing circumstances and new ways of working may mean directors need to rewrite staff contracts to reflect the current climate and ensure they cover any new duties, changed work schedules, or reduced benefits.
– Keep communicating: Open and honest communication is vital in maintaining key business relationships, and allowing the people you work with to make decisions based on the best possible information.
– Check and clarify your insurance: Check your business's insurance policy to see whether it includes a “force majeure” clause, which will provide compensation for lost income if certain conditions are met.
– Seek reputable advice, and the earlier, the better: If your business starts to struggle, taking early advice from a qualified, professional source can make the world of difference.
Philip Winterborne adds:
“More than ever, cash is king in business and knowing precisely where you stand in terms of managing your cashflow, outgoings and payment deadlines has never been more important, while keeping lines of communication open with your business’s networks of staff, customers and suppliers is essential.
“There’s a massive amount of support available right now for businesses of all sizes which may well be the fundamental difference between success and closure, so understanding what’s available and how you can apply for it is absolutely essential.
“Any directors or business owners whose businesses are in difficulty or are starting to see signs it will struggle should seek professional advice as early as possible.
“Taking this early advice and holding proactive discussions with creditors will give you a greater range of options to find and implement solutions to the challenges you face and will enable you to make a considered decision, rather than a rushed one. Good advice may also protect you from personal liability if the business fails.”