To furlough or not to furlough is the question as cash flow dries up and business comes to a halt. ICSM Credit members are struggling to find ways to survive the current coronavirus crisias some high profile High Street names such as JD Wetherspoons and Rick Stein simply laying off staff to save money. On the other hand Sports Direct attempted to stay open but was closed down by the Government. Next closed its stores and tried to retain its online business only to find is near impossible due to staff illness and distribution issues.
ICSM Credit’s Ian Carrotte said: “One of the questions members of ICSM have raised is can they lay off their staff or have short time working to see their business through the next couple of months. ACAS the Government’s Advisory, Conciliation and Arbitration Service is the place to start but like all employment law it is complex depending on what contracts are in operation.”
He said the most important actions to take are to draw up a survival plan with a view to restart business in June on a reduced scale.
“Number one is to chase up all outstanding invoices,” he said, “as most businesses have a couple of month’s cash flow at any one time. If the staff are furloughed and the Government picks up their wage bill then obviously that will help with overheads. If you have an office or factory that is not in operation then literally close it down and save on electricity.”
“Approach the landlords immediately for a rent holiday to see you through the crisis as well as looking at one of the Government loans. My main concern is if you do manage to jump through all the hoops,” he said, “and get a loan you will have to pay it back. It may be better to approach your current lender and ask for some breathing space or a temporary cut.”
He said many people in business are taking the opportunity to do all those jobs they never get round to. Going through all the old files on clients, updating sales contacts, cleaning and redecorating offices and getting rid of redundant equipment were other ideas.
Ian Carrotte said: “Anyone who has run a business or been self-employed will have known a lean period and has had to take a pay cut or reduced drawings. If your staff are taking a cut or being laid off then owners and directors need to follow suit if it means survival. A survival plan, cutting costs and planning for the restart will help all businesses to get through the crisis.”
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk