Clearly we are all living in critical times and many business owners / directors are unsure as to what they should do in order to care for their family but also their business.

It seems that advice, or even the scope of support, shifts every day, this making things exceedingly difficult and confusing. Just two examples:

1. Historically, most accountants recommended, (quite rightly), that directors of limited companies took a small salary and the rest of their income by way of dividend. Covid 19 has totally changed that landscape – reducing the level of salary paid to directors has severely limited the amounts available to support the very ones who wish to keep their businesses trading through this pandemic. They will suffer hardship unless the regulations change.

2. Resorting to a loan from the bank may have sounded like a good idea. BUT, news reports indicate that access to such loans has not proved to be as simple as many believed. Approval of applications has been slow, difficult to obtain and, perhaps more importantly, some banks have demanded personal guarantees from borrowers. As the duration and effect of the Covid 19 pandemic is clearly unknown, should a business fail despite the owner(s)/director(s) best endeavours, they face the loss of not only their income but also their home! 

There are indications that the position of the banks are changing, but there is clearly need for caution. 

So what to do:

Firstly, monitor and revise cash flow forecasts on a regular, if not daily, basis. Do not neglect your own credit control procedures.

Most importantly, do not panic and make uninformed or rash decisions. 

Communicate with customers and creditors in an effort to gauge how this pandemic is affecting their business. Keep in mind that the relationships we maintain now may affect how they view / deal with us in the future.

 The feedback we are receiving from HMRC is that they are willing to consider deferral of tax liabilities for a period to help businesses get through this crisis. So communicate with them, or ask an adviser to do it for you. 

Take advantage of the advice available from accountants and financial advisers. Knowing what you can (and can’t) do at this time is critical.

Bear in mind that licensed insolvency practitioners are in a position to help you steer the best best path for you and your business. Please do not hesitate to contact us for an informal chat at any time.