Edward Wade, Content Author and Technical SEO at Wilson Field, explores some of the alternative initiatives businesses can use to help themselves through tough times
Despite all the help from the government over the course of the Coronavirus pandemic, for some businesses, there is still quite a bleak picture. After restrictions were lifted, there is no doubt that the economy saw a small boom. But for many businesses, it was too little too late, with the extension of lockdown to the 19th of July a final nail in the coffin.
For many businesses across the country, they are still feeling the effects of not being able to trade properly for the last 12-18 months. The government support has been able to plug some of the gaps, with the furlough scheme, and bounce back loan, but what options do businesses have now what the government-backed support has come to an end?
You’ve got debts, but the business could work
With ‘freedom day’ meaning the end of lockdown, many businesses we’re able to return to full trading. However, for many, this meant returning to unpaid bills, statutory demands, debt and worry. With no more government support, it means that businesses are having to look at alternatives for a chance of surviving.
If you’ve done your research, assessed the numbers and know that with the right kind of support the business has a genuine chance of survival, a formal payment plan could save the business. A company voluntary arrangement (CVA) is a formal payment plan, which pools together all of your creditors and allows you to repay them in one affordable monthly amount. It typically lasts for two years and if at the end of the arrangement, you have any debt outstanding, it’s written off.
Would commercial finance work?
There are several different types of commercial finance and what will work, is very much dependent on the type of business in question and the financial situation it’s facing. For a lot of small businesses coming back, the problem has been cash flow, with so many businesses having a knock-on effect on one another, it has meant lots of unpaid invoices. Constantly waiting on unpaid invoices can massively slow down cash flow, in instances like this, invoice finance can help give the extra liquidity. An invoice finance company will advance you up to 90% of the invoice in question, then they’ll take their fee when the invoice is paid along with what they’re owed, before returning the change to you.
If on the other hand, you’re an asset-rich business with lots of expensive machinery or equipment, asset finance can be a great way of bringing in an injection of cash and helping out cash flow problems.
Restructuring the company
Although the process of an administration typically sounds like doom and gloom, not all administrations end up in liquidation. In some cases, a company can go through administration and a new company is then formed from its ashes. Crucially what an Administration can do for directors, is give them some breathing room. An administration will give the company protection from creditors, whilst giving the administrators an opportunity to keep the company running, restructuring where necessary and selling in some places, giving the opportunity for directors to start a new company.
The process of an administration might seem like a scary one, but the procedure could be the answer to the fresh start, many companies need.
For lots of businesses across the country, things might seem a bit bleak at the moment, especially with the majority of government help finished, or nearing an end. But as mentioned above, there are alternatives to cash flow problems, whether that comes through finance methods or restructuring means.