The Government has set out a package of measures to support individuals and businesses through the period of disruption caused by COVID-19. During the course of this week, we will be posting a series of Insights in which we examine those measures and, in order to help you decipher them, add our own commentary.
Safeguarding the essentials
However, more importantly, there are six key areas affecting each us which we are certain you will have been focusing on as follows:
- You, your family and your team – taking care and keeping safe.
- Cash flow – it is vital to build a “war chest” of money to keep you going through the coming months.
- Protection of your assets – including personal assets like your family home by considering a mortgage holiday.
- Banks and funding – ensuring your cash deposits are safe and lines of credit are maintained or increased with financial institutions.
- Management team planning – taking steps to ensure that when the Coronavirus pandemic has eased, business can resume.
- Customers and suppliers – keeping in touch with your customers during these difficult times and ensuring your supply chain continues to operate.
Clarifying your cashflow
Once you have ensured you, your family and your team are safe, it is vital to estimate your cash flow over the next three to six months as if your business or personal finances are not going to be able to operate at break even or within agreed borrowing limits, will you have enough money saved to survive during this period of disruption?
Even with the support announced by the Government, it is inevitable not every business in the UK will be saved, as the Chancellor of the Exchequer said himself. But with planning and responding to the challenges ahead, most businesses and individuals will be able to come through this period to a time where some form of normality returns.
If, however, the business is unlikely to survive, you should immediately take professional advice, as presently there is no relaxation in the stringent requirements of insolvency law which will be felt long after this period of disruption. Directors of businesses in distress should be concerned about the implications of wrongful trading and the preference of creditors.
If you need help in preparing cash flow calculations, do please talk to us. We have a number of tools available, of varying degrees of sophistication, to help address your financial position. Without the figures, it will be difficult to make clear decisions.
Keep in touch
The position is changing on a daily basis and you should therefore, contact us before taking any action as a result of the contents of this summary or our subsequent posts.
There is a final point for the future. Once this period of disruption is over, the Government will be considering tax increases to pay for the financial support being provided. If you are considering financial or taxation structuring, it may be sensible to proceed with this now in what we may come to regard as a relatively benign fiscal climate.
Above all, keep safe and stay strong. And remember, you are not alone and we are here to help you.