Support for SIBA members
A dedicated resource for SIBA members whose finances are under pressure in lockdown.
At PKF GM we help business owners and management teams navigate periods of financial stress. We’re also a long-standing supplier associate member of SIBA (the Society of Independent Brewers).
In response to the third Government lockdown we have created this dedicated web resource for SIBA members who, like many in the hospitality sector, are feeling the financial strain.
On this page you’ll find advice and links to further information on:
- Warning Signs: How to identify the warning signs which may point to a cash crisis and threaten your business’s survival.
- Managing Cash Flow Pressure: What are your options to raise extra cash or make what you have go further?
- Restructuring and Insolvency Options: How you can protect your business and help it to survive.
We know the huge stress which cash flow problems can cause. The sooner you act to address them, the better the chance your business can be saved. Don’t leave it too late.
If any of the below apply to your business you should speak to a restructuring professional for advice on how you can prevent matters from escalating.
- Can’t pay wages / salaries. This is the acid test.
- Can’t afford to make redundancies.
- At your overdraft limit and your bank refuses to extend it.
- Key suppliers have placed you on “stop” until you reduce your debt with them.
- Receiving threatening letters from debt collectors / solicitors on behalf of creditors.
- Receiving County Court summons and judgements.
- Being threatened with statutory demands and / or a winding-up petition.
- Unable to pay the rent and Landlord threatening enforcement proceedings.
- HMRC pursuing outstanding taxes.
Fortunately, a huge amount of help and support is available.
Managing Cash Flow Pressure
1. Access Government support
As a first step, we recommend you make maximum use of all the financial support on offer from government and local authorities. Details of these schemes are on SIBA’s website.
Most notably they include the Coronavirus Job Retention Scheme (furlough) (“CJRS”), the improved Self-Employment Income Support Scheme (“SEISS”) and local support grants. The application window for the Bounce Back Loan and Coronavirus Business Interruption Loan (CBILS) has also been extended, so these will remain available until at least the end of March.
SIBA and others continue to press for more government support, so review this resource regularly to keep up-to-date with national and local developments.
2. Talk to your creditors
If invoices or other commitments are likely to become overdue / unpaid for an extended period of time, we strongly encourage making direct contact with suppliers, landlords and HMRC asking for patience and support. Our experience is that this is almost always a better approach than avoiding contact with creditors, however attractive this may be in the short term. Here is more advice on negotiations with creditors.
If a supplier is refusing to supply further goods or services without a contribution to reduce your account, alternative suppliers may be willing to give additional credit, but be very careful of taking on new credit without a realistic prospect of being able to repay it.
We also appreciate that some suppliers will not be able to extend such forbearance forever, but the government has introduced temporary legislation restricting the use of statutory demands and winding up petitions as a debt enforcement measure. Landlords have restricted powers to enforce payment of outstanding rent and HMRC are allowing payment of various taxes to be deferred for considerable periods. Indeed, Time to Pay arrangements in respect of tax arrears appear to be being actively encouraged by HMRC.
These factors should be introduced into your discussions / negotiations with suppliers, creditors, landlords and HM Revenue & Customs.
3. Consider raising additional finance
If you feel you have exhausted these schemes, your Bank may be able to offer additional funding. Our experience is that Banks have sought to be supportive of their customers directly impacted by Coronavirus.
If your Bank can’t help, consider alternative / additional external funding, especially if you can offer additional security. There are many alternative lenders in the market place offering a wide range of funding packages, ranging from loans, to lease and hire purchase agreements to single sales invoice financing. Many can act very quickly and this may be a viable solution. But be cautious of some of the terms offered. Higher interest rates than your existing borrowing are almost inevitable. The lender may also seek additional personal security, such as a second charge on your personal house – a major step which may have life changing consequences.
4. Get professional advice
You may already be pursuing some or all the above solutions. It goes without saying that the earlier these issues are addressed, the more time you have to explore them and the greater the prospect of success. Timing can be critical. Don’t put it off.
Our experience of working closely with directors and business owners under these circumstances means that we know just how lonely and stressful these situations can be. The competing pressures of managing a business under severe cash constraints are significant and they continue to increase during the pandemic. We strongly recommend seeking a trusted adviser / confidante who can act as a sounding board and / or provide reassurance on strategies being pursued.
Restructuring and Insolvency Options
If you have exhausted all your options and think that there is no realistic progress of continued trading without some form of protection for your business, then there are restructuring and insolvency options which can help you save some or all of the business and be preferable to liquidation / bankruptcy. These include:
- Selling the company (it may be for a nominal value) or failing that all or parts of the business.
- Seeking potential investors who may wish to invest in the company, typically in return for a future stake in the business.
- The company / business being saved by a formal Voluntary Arrangement with its creditors.
- The Statutory Moratorium recently introduced as part of new legislation. This new process is aimed at helping businesses survive, leaving the day to day control of the company in the hands of the directors whilst they implement a survival plan.
The above options should be assessed with the assistance of professional advice. Certainly options 3 and 4 should involve a Licensed Insolvency practitioner. This could also have the added advantage of ensuring that the directors meet their obligations under the Insolvency Act whilst the options are explored.
If all these options fail and Liquidation or Bankruptcy is inevitable, seek professional advice to avoid any actions now inadvertently having an adverse impact on your ability to earn a living in the future, whether in the brewing industry or another sector.
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