The consequence of the Coronavirus on travel and tourism is affecting or will also be affecting many other businesses, particularly those relying on discretionary spend. Covering fixed costs is a major issue for businesses seeing a sharp downturn in trade, as is the cash required to meet those costs, including rent, business rates and employee payroll costs. The government has promised Time to Pay to help businesses. If this isn’t enough, businesses will have to turn to their banks and suppliers for extended credit. The cash flow problems should be short-term and now may be the time for some businesses to propose a Company Voluntary Arrangement (CVA) to ask all unsecured creditors for forbearance until normality returns.
We have helped many businesses work though difficulties with cash flow. If you want to know more and would like us to consider with you your contingency plans please do not hesitate to contact me or one of my Corporate Advisory partners.
In the alternative, if you believe you can work through the problems affecting some of your business, now would be a good time to consider how you can de-risk your business by demerging the riskier parts from those parts not so exposed.