By David Swinburne, FitzGerald Legal & Advisory
LOCAL businesses have been forced to put crisis management and business continuity plans in place since the start of the pandemic. But few realised the massive negative impact the arrival of the virus would have on their cash.
The government has introduced welcome initiatives to provide much-needed resources to employees and families. Other supports are also available through Local Enterprise Offices and Enterprise Ireland. But many businesses are still tasked with taking ownership and responsibility for their own survival. This is our new reality.
It’s time to conserve, not hoard, our cash. Cash is like blood and needs to keep flowing in and out of a business. With less control over, and less certainty on, its cash inflows, businesses are forced to place greater control on cash outflows. All businesses by in large have the same broad range of key stakeholders: employees, customers/clients, suppliers, creditors, landlords and funders, each of which play a competing critical role in the survival of the business. We must continue to engage and communicate with each of these stakeholders in an open, honest, responsible and transparent manner.
Management teams must look at cost (including payroll cost on expiry of the vital government supports) and assess each line item of cost. They must cut out non-essential expenditure and cut back on core expenditure required to keep the wheels turning,
Innovative ways on how to sell goods and services should be high up on the agenda. Now is the time to implement what the ‘new normal’ business world that it is unfolding requires of you, which in turn will assist with your survival.
Now is the time to set out the working capital required for when you re-open, and engage with your funders to have this is place when you change the sign on the door from ‘Closed’ to ‘Open’.
It is also vital that you continue to ensure compliance with filing of annual returns with CRO and ensuring compliance with Revenue filing obligations and other regulatory bodies.
Amid all this it is important that teams take time to focus on their own individual and team well-being.
A business can make profits or losses but can only run out of cash once! Covid-19 is first and foremost a threat to human life and therefore our physical and mental health are a priority. If we don’t have these, then we will not have the energy to fight the fight to save the economy, and remember … blue skies do, and will, lie ahead.
• David Swinburne is restructuring and insolvency partner and head of advisory at FitzGerald Legal & Advisory, Skibbereen and Lapps Quay, Cork. Email: [email protected]