As we progress in 2021, many will still be reflecting on what was a very challenging 2020. The Coronavirus pandemic has affected almost every part of our daily lives and has hit many businesses and the wider economy hard.
Whilst HM Government’s tougher restriction measures at the start of 2021 will continue to have an adverse impact for many people and businesses, there are reasons why the outlook for 2021 is more positive.
5 reasons to remain optimistic about the future:
- Vaccine Rollout – the rollout of Covid vaccines commenced in December 2020 and is accelerating with the most vulnerable already inoculated ahead of schedule and adults expected by July 2021
- Government support - The HM Government’s support measures appear intrinsically linked to lockdown restriction such that those support mechanisms will likely remain whilst businesses continue to be impacted
- Pent up demand - Lockdown measures have reduced consumer spending on fuel, leisure and entertainment. Many consumers will have saved and will be keen to spend this disposable income as and when lockdown measures are relaxed
- More flexible working – The pandemic has forced companies to adapt and adopt flexible working arrangements and remote working which will provide opportunities to improving efficiencies
- With change comes opportunity – Throughout history, terrible tragedies have led to great transformations. This latest crisis has created new desires and with it opportunities for businesses to adapt and service those needs
What should businesses be doing to plan for a post-lockdown world?
During this pandemic many otherwise viable and profitable businesses have seen their revenue reduced due to lockdown measures. Some have adapted their business model, some have reduced their overheads and hunkered down, and almost all have used the government support measures at their disposal to minimise the impact. You can find five strategies to help businesses prepare for post lockdown
here.
It may comes as a surprise that formal corporate insolvencies have fallen by approximately 40% year on year throughout the pandemic, which demonstrates that these support measures have proven critical in minimising the collateral damage.
That said, many of these support measures are premised on either new finance (such as
CBILS and
Bounce Back Loans) or the deferral of debt payment (such as tax deferrals and creditor/landlord enforcement moratorium), designed to safeguard cash flow. Whilst these measures are crucial in preserving working capital, it may be creating a longer-term issue for businesses, one of increasing debt, which will need to be paid in the years to follow.
As the government begins to ween UK Plc off life-support as the situation improves, it is vital that businesses plan for their future.
Businesses should ensure that they have up to date and robust financial management information. Whilst forecasting is currently challenging due to the constantly shifting landscape, certainty should begin to return and forecasts (including cash flow forecasts) will enable businesses to manage cash flow and prioritise debt payments. Many businesses from start-ups to large businesses have moved to Cloud accounting to manage their cash flow, take a look at some
Cloud tools to see how they can help improve your businesses’ cash flow.
Some businesses may find that whilst their businesses can return to profitability, the historic debt may be insurmountable and lead to cash flow pressure and ultimately insolvency. In this scenario the business can often be rescued through the use of a formal restructuring process such as an Interim Moratorium, Company Voluntary Arrangement or sale via Administration. It does not necessarily lead to the closure of the business. If you find yourself in this situation, you should seek professional help to help identify your options and advise on the best course of action.
Moore Restructuring and Insolvency
If your business is suffering financial distress, you are not alone. At Moore, we have a highly qualified and experienced team of restructuring and insolvency professionals who will:
• Provide an initial consultation free of charge and without obligation to explore your situation and work out the best solution tailored to your business
• Act confidentially
• Maintain the highest standard of client care
• Always be hear to listen and act with compassion
Please
contact us today. All initial consultations can be undertaken safely by telephone or video call. We have the experience and expertise to help resolve your businesses financial problems.