By Peter Windatt
BRI Business Recovery & Insolvency
WHEN I started drafting this we were not so locked-down. The majority of the BRI Business Recovery and Insolvency team were still in the office. All that has changed. Life, as we knew it, was put on hold. When a new normal will emerge is far from certain.
What I now write could equally be out of date before it is published.
Some industries are clearly being more adversely affected than others – leisure, travel, services; the ‘nice to haves’ rather than ‘need to haves’. Life has become considerably more constrained; spending, other than on essentials, is drying up.
The professions are not exempt. One of the large accountancy firms has asked people to take sabbaticals. Law firms’ workloads have taken a dramatic dive.
Family incomes, depending greatly on how they are earned, are being greatly affected. The majority may be being offered considerable help. Others fall between stools. We had a new member of staff start with us, collect a laptop and immediately go home. No furlough for her – if we wanted to – she joined us after the 28 February 2020 cut off. Government help won’t necessarily reach all – in particular, the self-employed working through their own one man/woman companies. How will their bills be paid? The future isn’t looking bright – more red than orange.
With so many people and businesses rightly in lockdown there will be fewer payments being made in respect of debts – cash flows are being stretched. Who knows by how much?
With customers breaching credit terms, sales will move from credit to cash or pro-forma only. A sale really isn’t a sale until it is paid for. Why give up possession of assets of value in exchange for a promise that may never be honoured?
And yet, to some extent, perhaps you must. Businesses have to acknowledge that we are all in a similar boat. Profit is monies earned by taking a risk. If we are going to retain customers to serve in the future, we must surely all work together now.
Only make promises that can be kept. Look for win:win. Don’t exploit leverage beyond the reasonable. Those who seek to profiteer from these troubled times will, in a fair world at least, get their comeuppance. With a fair wind, improving weather and, hopefully, spirits we just might make it out to the other side.
There is always churn, ‘capitalism without bankruptcy is like Christianity without hell’, but we need to play with a straight bat, keep our promises and manage people’s expectations when things are not going to plan. Be good citizens, do your part and, hopefully, we will be rewarded. It has to be better than being dastardly, surely?
If you need advice, contact the BRI management team for a free, confidential chat with no obligation on 01604 754352.