It is widely known that football clubs in the UK automatically receive a points deduction (normally 12 points plus) if they enter into Administration. The rationale for a points deduction is that the club that enters into Administration receives a competitive edge over their rivals in the same division either fighting for promotion or avoiding relegation.
Football clubs receive a points deduction as they:
- Receive the benefit of shedding their debts giving them a financial edge over their competition, and
- Receive the benefit of professional advice at no direct cost to the club
As most will know football clubs are businesses in the form of Limited companies. During these “unprecedented times” and current financial uncertainty, businesses that are facing cash flow difficulties could benefit from taking financial advice sooner rather than later. Unlike football clubs this advice comes without a points deduction!
As the country gradually eases the lockdown with some sectors now open, some open but with reduced turnover levels and some sectors still unable to open, the future financial uncertainty will continue to impact many businesses across many sectors.
As we return to the “new normal” business continue to face uncertainty with:
- The impact on your business as parts of the country will face future restrictions / lockdowns
- The impact on businesses now we are in a formal recession, how long the recession will last and how the recession will affect your business
- Will interest rates remain at a record low? What will happen to your business if and when interest rates increase?
- The ongoing financial uncertainty of whether the Government will secure a Trade Deal with the EU at the end of 2020
- Being able to afford the costs of any redundancies as a result of ongoing reduced turnover levels
- Dealing with deferred taxes from Quarter 2 of 2020 that become due and payable in 2021 coupled with loan repayments that start in 2021 for any bounce back loans obtained in 2020
Many businesses in all different sectors are facing daily challenges with:
- Inability to reduce the overhead costs in line with reduced turnover levels
- Customers not paying within terms
- Being unable to project for the future
- Unable to negotiate reduced rents
Just like our football clubs, businesses should act now and obtain the competitive edge and seek professional advice. The main advantages of taking advice early include:
- More options are normally available to businesses that take advice early. Our advice is bespoke to each business and their current circumstances. The options include avoiding a formal insolvency to the range of insolvency options only if they are appropriate
- Taking a second opinion may provide options that the Board have not considered
- Being in a strong financial position when business returns to “normal” will provide your business with an advantage over the competition
- Ensuring that the Companies working capital is not used up covering any losses during the coming months and making sure that the Company has sufficient working capital when things return to normal
Why not get ahead of your competition and book an appointment with Cowgills Business Recovery. The initial meeting is free of charge and without any obligation.
Disclaimer
The information was correct at time of publishing but may now be out of date.
