By Rob Adamson, Restructuring, Recovery and Insolvency Partner, Armstrong Watson

WITH the UK Government keen to get the economy moving again, what is the impact on businesses who are dealing with a cash crisis?

Social distancing measures come at a cost

Certain measures will involve additional costs (enhanced cleaning, additional signage, etc.). Reviewing your cash flow to determine how those costs can be incorporated will be vital for many business owners.

Additional costs may impact upon turnover

If your cashflow shows that turnover is going to be drastically reduced, then it will be necessary to review your plans to determine whether you can afford to reopen, at least in the short term.

You may not need as many staff going forward

If you adapt your business model then you may need less staff to operate. If you do have to reduce your workforce, the costs of doing so will need to be included in your cashflow forecast.

Deferred obligations will need to be paid

If you are worried about your business’ ability to meet any payments that you may have deferred, seeking advice is the key to survival. Taking on additional debt to meet these payments is unlikely to be the best option.

Certain loans may not provide the solution

Whilst taking out a cashflow loan can seem like a quick and easy answer, it often becomes costly very quickly, with costs of servicing the debt being high when compared with more traditional borrowings. Whilst these loans can be of assistance, they should only be considered as part of a wider solution.

A healthy balance sheet does not equal healthy cashflow

Being unable to meet payments as and when they fall due is one of the key indicators of insolvency, so if you are in a position where you can’t pay your suppliers, as a director, you need to seek advice to ensure that you are acting in the best interests of all stakeholders.

The situation does not have to be terminal

Plenty of business owners will be reading the above and thinking that they will be coming to the end of the road for their business. This does not have to be the case. There are many options available to business owners, some of which can be carried out as a wider business review. Seeking support and advice sooner rather than later will be key. If you’d like to discuss the options available for your business, please get in touch for a no obligation initial consultation. Contact Rob Adamson on 07970 731804 or email