A Checklist for Businesses Affected by COVID-19 – key actions to take and contingency plans to make
These urgent actions apply to businesses and companies regardless of size.
This is the guidance we are giving to the many businesses we are advising, many of whom are now working from home and wondering where to start.
Last week’s announcement from the Chancellor set out a raft of measures to assist businesses which could make a vast difference to many businesses. Some of the detail which will enable you to access these packages is still to follow. There are, however, a number of actions that businesses can undertake to prepare for speedy applications and to prioritise what is most time-critical.
As you would expect, banks and HMRC are being very supportive of the businesses we are advising through these very challenging times. There are two key points that may influence the checklist below:
- A ‘Business Plan’ for recovery and repayment will put you on the front foot – you should be ready to talk through this plan with lenders and creditors
- Be mindful of any director, personal or family member guarantees that already exist for loans. New guarantees may be required for any government-backed loan schemes
You should be considering the following:
- Coronavirus job retention scheme for those businesses who have concerns around staff
- Remote working/Early Holidays/Short Time Working/Sick pay/SSP/Travel Policies/Health and Safety Policies/Redundancies
- Maintain an open dialogue with Customers, Suppliers, Contractors and Trading Partners
- Time to Pay: Defer VAT/PAYE/NIC/CIS/MGD payments for pre-agreed periods
- Defer Rates Payments where you are able to
- Where applicable, claim new business rates reliefs
- Maintain an open dialogue with landlords – agree Rent
- Prepare updated Bank Facilities including Capital Holidays
- Coronavirus Business Interruption Loan Scheme – with effect 23rd March. These are loans, not grants – a business plan which details your ability to repay this will be essential.
- Defer Capital Expenditure
- Apply for a reprieve on finance repayments in respect of Hire Purchases of Leasing – three to six months or more if you can
- Improve and accelerate Income
- Credit Control is of tantamount importance
- Reduce the amount of stock you carry
- Review your insurance policies
- Review your contracts and advance orders
- Review your routes to market
- Review and where possible revise you T&C’s
There are many practical steps which businesses will be able to take either themselves or with their professional advisers.
CGA can be contacted at any time for advice and support.
UPDATED (31/03/2020) for the announcement made by Alok Sharma 28/03/2020 – information provided by Redman Nichols Butler
On Saturday, 28 March 2020 at the No 10, Downing Street daily Covid – 19 Health Crisis media briefing, Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy, announced that the Government will bring into law in “the coming weeks” changes to the UK insolvency laws to help struggling British businesses stay afloat and give them “greater flexibility” during the coronavirus pandemic and emerge intact the other side of it.
He said that the measures will give firms extra time and space to weather the storm and be ready to get back to normal when the crisis ends whilst ensuring creditors get the best return possible in the circumstances. He also said that that the changes will allow companies undergoing restructuring to continue access to supplies and raw materials to carry out their activities.
Mr Sharma also announced that there would be a temporary suspension of the wrongful trading provisions “for three months” to be applied retrospectively from March 1 2020 for company directors to remove the threat of personal liability during the pandemic, but he was keen to emphasise that all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.
The Insolvency Service have, over the weekend, issued further information on the Government’s proposed changes. They include:-
- A moratorium for companies giving them breathing space from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure.
- Protection of their supplies to enable them to continue trading during the moratorium.
- A new restructuring plan or procedure, binding creditors to that plan.
As soon as we have more information, we shall let you know.
Redman Nichols Butler