As a result of the coronavirus pandemic, many businesses are facing unprecedented uncertainties around business continuity. The government has introduced new public health measures, which state that all non-essential businesses should close until 12th April 2020.
These measures have widespread implications for so many businesses across Ireland. And the restrictions will certainly put these businesses to the test when it comes to survival. Orpen Franks Solicitors LLP wants to offer some practical advice on business continuity during the current pandemic.
1. Cash Flow
This is the most important area to look at for business survival in the coming weeks and indeed months. Tight cash flow is essential because as there is no timeline as to when this current pandemic will end. A business should review their cash flow carefully and ask the following questions:
- What income are you due to receive in the coming weeks?
- How much income do you need to trade?
- Can you follow up on any outstanding debts?
- Can you avail of the range of supports available from the government?
2. Cutting Costs
A business should cut unnecessary costs where they can. There may be some tough decisions to make. You should ask the following questions:
- Can you reduce expenditure on non-essentials?
- Can you renegotiate outstanding debts / interest rates?
- Temporarily lay-off staff?
- Consider scaling back operations?
3. Minutes of Meetings
A business should keep minutes of every decision and outline the reasons for doing same. After this is all over and down the line something could crop up. Then you will require a record of why that decision was implemented.
4. Leases and Landlords
It is easy to foresee that there may be defaults in rental payments over the coming weeks. If you are in this situation, the best advice is to speak to your landlord in advance, Then, you can try to agree a workable solution. It is expected that a reasonable level of forbearance will be shown.
In the event you are unable to pay suppliers, you should contact them as early as possible. The commercial reality is that many suppliers may extend credit terms in order to maintain the business relationship. Be mindful however that your suppliers are also likely to be answerable to landlords, banks etc.
6. Government Assistance
Look at what assistance the Government is providing:
- Payment Breaks – Ireland’s five main banks, AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank have all agreed to payment breaks. They’ll provide their business customers with breaks of up to 3 months on business loans who are affected by COVID-19. If you wish to avail of these payment breaks, you should contact your bank as early as possible. This will not affect a customer’s credit rating.
- Commercial Rates – the government has agreed that local authorities should defer rates payments due from the most immediately affected businesses. The deferral runs until the end of May. The affected businesses are primarily in the retail, hospitality, leisure and childcare sectors.
- VAT – Applications of interest to late payments of VAT are suspended for January/February. This is effectively a VAT payment deferral. Application of interest to late payments of employer PAYE (income tax) liabilities suspended for February/March. This is effectively a payment deferral.
- Debt – All debt enforcement is suspended until further notice by the Revenue Commissioners.
- Credit Cards – a small but important change for many businesses. The limit for contactless credit card payments has been raised from €30.00 to €50.00.
- Employees –You may have been temporarily/permanently laid off, asked to stay home, or are not getting money from an employer. If so, you can apply for the COVID-19 Pandemic Unemployment Payment. The Government has introduced a COVID-19 Pandemic Unemployment Payment. It is paid at a flat rate of €350.00 per week for the duration of the pandemic emergency. Payment is made by electronic transfer into your bank account. It will be paid into your bank account every Tuesday once your application is processed.
- Employers –If you’ve lost at least 25% of your trade, employers can claim 70 percent of their employees’ net wage back. It’s through the Temporary COVID-19 Wage Subsidy Scheme and there’s a limit of up to a maximum of €410.00. Employers have to sign up to the scheme through Revenue.
- Strategic Banking Corporation of Ireland (SBCI) – is currently working to finalise the terms and conditions of the €200 million SBCI COVID -19 Working Capital Scheme and the eligibility application process for this.
- Enterprise Ireland – has a number of supports available to mitigate the impact of COVID-19. A €200 million Package for Enterprise Supports including a Rescue and Restructuring Scheme is available through Enterprise Ireland. A Finance in Focus grant of 7,200 will be available to Enterprise Ireland and Údarás na Gaeltachta clients.
- The Government’s SME Credit Guarantee Scheme – It offers loans of €10,000 up to €1 million which you would not avail of under normal lending terms. Find out more here about the scheme.
- The maximum loan available from Microfinance Ireland has been increased from €25,0000 to €50,000. These loans are now interest free with no repayments for 6 months.
- Local Enterprise Offices in every county will be providing vouchers up to €2,500.
IBEC, the business and employer association for organisations based in Ireland launched a new report that details the range of proposals for Government to effectively address the profound economic fallout of COVID-19 crisis. The report outlines a two-stage strategy of (a) Mitigation and Preservation and (b) Reboot and Recovery. The detailed report can be found here.
If your business has been affected by the coronavirus pandemic and you are having business difficulties, you should seek professional advice. If you have any queries on the above, please contact us on 003531 637 6200 or email firstname.lastname@example.org.