'Pressure still on' despite new support measures
The pressure is still on for firms who are struggling during the pandemic, say experts at Preston-based Begbies Traynor. The firms says that new measures announced by the Government to support businesses go some way to easing cashflow for firms struggling to work out how to pay back a combination of pre-Covid debt, tax bills and new Government loans. However, despite this, many firms need to seek professional advice on restructuring their finances to avoid becoming a casualty of the pandemic.
Ian McCulloch, partner at Begbies Traynor in Preston, said: “The Chancellor was under pressure to bridge the gap and avoid a cliff edge once the furlough scheme ends. On the face of it, this new package of measures provides a helping hand to get people back into the workplace on reduced hours. However, the lion’s share of responsibility now shifts to the employer who will have to find 55% of an employee’s pay for working just one third of their usual hours.
“These measures are aimed at supporting viable jobs and firms that have been just about trading through the crisis. It may not be enough for many of the so-called ‘zombie’ companies in our region.
“The reality is that the pressure on businesses across our region remains.
"The extension to loan repayments and an extension to VAT payment deferrals will be welcomed by company directors, but the fact remains that at some point these debts need to be repaid and that will be challenging for businesses that are still struggling to reach pre-pandemic activity or subject to ongoing local lockdown restrictions.
"It's now mission critical that businesses analyse their cashflow position, make adjustments to the way they operate their finances and seek professional advice if they find themselves in trouble despite these measures."