Businesses struggling with cashflow as a result of the coronavirus outbreak need to act early to ensure their survival, a North East insolvency expert has said.
Alexandra Withers, North East chair of R3, the insolvency and restructuring trade body, said many businesses were likely to need more help above and beyond the £350bn support package announced by Chancellor Rishi Sunak earlier this week.
Her call has come as Newcastle city centre business body NE1 has called for more help for struggling businesses, particularly those in the retail, leisure and hospitality industries that are at the sharp end of the response to the coronavirus outbreak.
Ms Withers, who works in insolvency for Newcastle solicitors Short Richardson & Forth, said: “The Chancellor’s ‘Whatever It Takes’ strategy is the right one, but other types of help will be needed alongside the additional access to finance that’s been announced.
“Many businesses will face insolvency without significant creditor forbearance or direct help from Government to bridge the gap in their finances, and as well as additional money going into businesses, payment holidays for businesses on things like PAYE, National Insurance Contributions or other taxes will also help them manage their outgoings.
“There is no doubt that a lot of North East firms will either already be feeling pressure on their cashflow situations or will be able to see problems arising in the future, and there will be a wide range of different challenges facing different businesses in different sectors.
“The message that we’ve always sent to the owners and managers of struggling businesses to seek professional advice as soon as you think you need it will be relevant to all of them and it will be more important than ever that they take this approach in the coming months.”
Meanwhile, NE1 – which represents businesses in retail, leisure and hospitality that employ nearly 20,000 people – has called for “exceptional measures” to keep companies afloat.
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Chief executive Adrian Waddell said: “These are unprecedented times and require exceptional measures. The Chancellor’s £350bn support package for businesses announced earlier this week will go some way to mitigating the negative impact of the epidemic - especially on some of the city’s businesses that have been hardest hit, principally in the leisure, retail and hospitality sectors.
“But with forecasts predicting that the situation will get worse before it gets better more needs to be done by Government with regard to wages to ensure that when the worst has passed, businesses are in the best place possible to bounce back and get people back to work.
“As such, we call on Government to underwrite and pay for a fixed amount of every employees wages in those sectors facing the biggest challenges.”
Meanwhile, new Bank of England governor Andrew Bailey has urged companies to do everything they can to keep people in work.
He said: “We will do what it takes to meet the needs of the economy and the needs of the people of this country.”