If you’d been standing at a New Year’s Eve party in 2019 contemplating the coming year, the chances are that you didn’t quite foresee the turmoil that lay ahead…
The onset of the Covid-19 pandemic and everything that came with it meant businesses had to adapt quickly against a constantly changing backdrop of lockdowns and restrictions, the introduction and evolution of a wide range of brand new government support measures and the ever-changing needs of customers and suppliers in a market that was almost impossible to predict.
Businesses, and business owners, have had to be resilient and adaptable to survive in the face of challenges that none of us could really have foreseen – but with its built-in resilience, North East businesses have, generally speaking, coped well so far.
In the early part of the pandemic, businesses quickly took stock and re-evaluated their business models to deal with the immediate challenges that Covid-19 was presenting.
Almost all of them reviewed their cost base, stripping back non-critical and discretionary spend, and began to explore and understand the different support measures that were put in place by the government.
Business owners had to quickly learn and understand what was on offer, much of which was entirely new and some inconceivable just a few months before.
Measures such as the Job Retention Scheme, CBILS and Bounceback Loans have made a crucial difference in keeping many struggling firms afloat over the last year, while the temporary restrictions on enforcement action and wrongful trading introduced by the Corporate Insolvency and Governance Act (CIGA) have helped to provide much-needed business protections.
However, these measures were never meant to last forever, and while extensions to some are possible, many will naturally need to come to an end over the coming months.
For example, the restrictions preventing landlord forfeiture action and the ban on winding up petitions are currently due to end on 31 March 2021, while the suspension of wrongful trading liability and the latest extension to the furlough scheme currently last until the end of April.
Whilst it is hard to see that these measures will be withdrawn all at once, and steps are being considered to extend and revise some of these schemes, blanket measures must withdrawn sooner or later to allow what is essentially a hibernating economy to reopen.
These measures have provided time for business owners to objectively assess their businesses’ positions and to plan for the future, so they can ensure they are in the best possible shape as the economy reopens.
However, if this assessment has identified stress or destress within the business, the importance of taking early advice to address and resolve impending problems can’t be overstressed.
Proactively seeking early advice significantly broadens the range of options available to businesses and provides time for directors and management teams, and those that are helping them find appropriate solutions, to properly assess what appropriate and timely actions might be taken.
On the other hand, last minute reactive decision making will almost certainly serves to reduce the range of solutions available and often means companies may miss out on the vast turnaround and restructuring strategies that are available to support business rescue.
So our key takeaway is be pro-active and not reactive, take early professional advice that will significantly improve the prospects distressed businesses surviving what is likely to be the most challenging market conditions they hopefully ever have to face.
For further information on how RMT Accountants’ specialist recovery and insolvency team helps struggling businesses find the most appropriate solutions to their financial difficulties, contact Chris Ferguson on 0191 256 9500 or visit www.r-m-t.co.uk
By Chris Ferguson, head of recovery and insolvency at RMT Accountants & Business Advisors