IN THE SPOTLIGHT: LEGAL SERVICES


TOP 10 TIPS FOR DEALING WITH COVID-19 AND FINANCIAL DISTRESS


Peter Godfrey-Evans, partner at Mercer & Hole Chartered Accountants shares advice for businesses facing financial distress in the wake of the Covid-19 pandemic.


1. Keep calm – in the words of Douglas Adams ‘don’t panic!’ These are uncertain times but at some point life will return to normal and people will need the service/product you provide. 2. People – follow Public Health England recommended precautions to help prevent the spread of disease. For your organisation understand which people perform which critical task and what happens if they are out of the business for a period; share skills, information and training to increase resilience to absences. 3. Cash is king – have you got cash flow forecasts, have these been subject to sceptical revisions in light of coronavirus? When will the cash run out? 4. Manage costs – what is necessary spending and what is unnecessary spending? Are there current commitments which can be put on hold or adjusted to current requirements? 5. Flexibility – how can your business change to combat threats identified; flexible working, reducing capacity, different product mix etc? 6. Document decisions – why is a payment business critical, why are your actions in the interests of creditors, why are you continuing to trade? Decision making during times of stress can be difficult to analyse retrospectively, so make sure your actions are justifiable based on the information you have at the time.


7. Identify key suppliers – what happens if that supplier goes bust? Identify an alternative supplier(s), are you in a position to make a strategic acquisition? 8. Identify key customers – are they financially vulnerable to the current crisis, what happens if they go bust? How are you managing debt collection, to what extent can you support customers with time to pay to protect your future route to market? Where either suppliers or customers go into an insolvency process seek advice as to your rights, cont inuation of supply, and potential outcomes from the process, so that you can understand the impact on your business. 9. Get advice – trading in the twilight zone is notoriously tricky but the current climate makes it even more so. Personal liability can occur because of breaches of the Insolvency or Companies Acts, including: I. Trading while insolvent (Wrongful or fraudulent trading) II. Transactions at an Undervalue III.Preference transactions 10. Our Corporate Restructuring and Insolvency team are specialists in advising on financial crisis. We are happy to have initial conversations with clients about their specific circumstances without initial cost or commitment.


Contact: peter.godfrey-evans@mercerhole.co.uk or 01908 605552


LESSONS TO BE LEARNT FROM LOCKDOWN


Nicola Holton (pictured), legal director, restructuring & insolvency at EMW, shares a personal insight into the lessons she has learnt from the Covid-19 lockdown, and sets out how those principals can be applied in both our business and personal lives. Today is 6 April 2020. It’s a beautiful spring day and the country is in


lockdown. I’m writing this article from a laptop on my dining table. If you’d asked


me at the start of the year what 2020 would bring, I’d never have predicted this. This article will be published in a few months’ time and it’s difficult to predict where we’ll all be then. Even as I write, in these first few weeks of lockdown, lessons are being


learnt for the future. Everyone is aware of the obvious business lessons going forward: • Cash is king. Consider what funds your business needs to survive if for whatever reasons they are unable to trade for a period of time.


• Collect your debts. Chase your debts early and effectively to ensure the continued collection of cash.


• Terms and conditions. Consider how you engage with key suppliers, customers and banks.


In one sense these are the more negative sides of the


lockdown and its ability to expose a business’ weakness, but what about the positives? One significant positive that has come out of the lockdown is


that businesses have been challenged to work in different ways. These are some of the less obvious lessons I have seen from the lockdown: • Home working. Employees can work from home and the job still gets done.


• Technology. The rise of the virtual meeting. We don’t need to insist on everyone being physically present at the department meeting at head office. Virtual parties, pub quizzes and cocktail hour could become the new way of networking.


18 inbusiness JUNE/JULY 2020


• Innovation. Business have adapted to survive, and some of those adaptations are here to stay. For example, cafés unable to trade are using their supplier contacts to operate as food shops and gyms forced to close are renting their equipment to customers and offering a virtual workout online.


• Flexibility. Children and childcare are a key concern for many - yes it’s a juggle and no it’s not ideal. However, with greater flexibility the workplace suddenly becomes an option for the thousands of overqualified parents who are either unable to find work or forced to take jobs they’re overqualified for because of the need to make the 3pm school pick up. So, after this period of social distancing, what will your lockdown legacy be? Rather than focusing on the negatives, who not focus on the positives and use the lesson lockdown has created to make positive, and future proofing, changes to your business.


‘LESSONS ARE BEING LEARNT


FOR THE FUTURE’


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24