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, continuation 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:
- Trading while insolvent (Wrongful or fraudulent trading)
- Transactions at an Undervalue
- 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.
