CCR2 Wave of debt
done as soon as possible so that you know what the amount is.
31 March 2021 One of the first things the chancellor announced was that no VAT that was due during lockdown needed to be paid until the 31 March 2021, so this is a significant date, and, given the various drains on businesses’ cashflow that have already had a significant impact, has the potential to be one of the most critical dates in the COVID-19 crisis. I fear there is a risk that more businesses
could be pushed into insolvency on 31 March than during the actual lockdown. This statement may seem a little negative but it is essential to confront the realities of the situation now and as it is more than nine months away, you have time to plan, put money aside or arrange facilities to fund it. The worst thing you can do, as a business owner, is to put your head in the sand and ignore this potential issue that is coming towards you. Other dates to keep in mind are rent
quarter days; traditionally in the UK, quarterly rent is payable on 25 March, 24 June, 29 September, and 25 December.
September 2020
The worst thing you can do, as a business owner, is to put your head in the sand and ignore this potential issue that is coming towards you
If your business pays rent quarterly, then
three of these quarter days closely coincide with the key dates we have identified at the end of September 2020, December 2020, and March 2021. If your forecasts indicate that these dates
could be a problem for your business, now might be the time to start negotiating with your landlord to switch to monthly rentals to smooth the cashflow effect.
1 May 2021 The final date to be aware of is the year anniversary of the CBILS (Coronavirus Business Interruption Loan Scheme) and BBLS (Bounce Back Loan Scheme). These started to be advanced in April and May 2020, mostly with 12-month repayment
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holidays, so most repayments will start around 1 May. The CBILS loans were assessed for
affordability, often assuming a return to 2019 trading levels by the time the loan payments commence while the BBLS loans were issued with no checks on affordability at all. Due to the significant impact on the
economy, it is quite likely that 2019 sales levels will not return, and that, combined with the aforementioned pressure on cashflow, many businesses could find themselves unable to repay their loan and I fear this could result in a second wave of business failures over the course of summer.
Conclusion I may sound alarmist, and while the situation is not ideal, those businesses that are prepared to confront the brutal facts of their current reality will be the ones that prevail. The dates above are key; highlight them in
your calendars now and start thinking about how you might navigate through a series of ‘pinch points’ from a cashflow perspective. The key to business resilience will be to
address these challenges head-on and it all starts with planning. CCR2
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