As lockdown restrictions ease and companies start to see an increase in business; now is the time to plan what the next few months and even years start to look like. Decisions made in the next few months could have far reaching consequences.
The Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan (BBL) have been essential in many cases to keep companies trading. They have enabled payment of bills and suppliers that were still needing to be paid and could not be deferred. Care is needed here however, as although a source of relief they are only a loan. Therefore they should not be confused with furlough payments and grants, which do not need repaying. Some companies have seen an immediate uptick in business, but what if yours hasn’t? You need to be planning to pay these loans down potentially early next year; but how do you know if you can afford it?
The other thing that companies need to be aware of, is that many of these loans have effectively been used to fund losses over recent months. The loans do not go through the company P and L as income. Their cashflows might look OK for the time being, but the profit and loss accounts are not going to look great. Why is this a concern, as it seems to contradict the old adage of “cash is king”?
The issue we see is three fold:
Here at WCL we are expertly placed to assist in any of the above issues and would highly recommend planning for the future and your year end now.