Directors of companies that have been heavily impacted by the Covid-19 crisis are being urged to make smart use of the final weeks of the government’s furlough scheme.
The scheme has been supporting businesses by covering some of their wage bill costs for the past several quarters but is scheduled to close at the end of September.
Experts from the insolvency and restructuring trade body R3 have said that company directors should use the next few weeks while the scheme is still open to review their business’ financial position.
The view from R3 is that directors ought to consider seeking out third party advice on their financing options if the end of furlough will hit their business hard.
More specifically, the organisation has suggested that directors of companies showing signs of financial distress should use the final weeks of furlough to assess where their business is at financially and to get advice on the options available to them.
“Talking to someone about the problems your business faces at an early stage means you have more potential solutions open to you and more time to take a decision about how you move forward,” said R3’s deputy vice president Nicky Fisher.
“It’s very hard to have that conversation, but starting it early generally leads to much better outcomes for you and your business than if you put it off.”
Ms Fisher went on to mention that many company directors are known to be worried about what the future might hold after the furlough scheme ends and as they start to repay the loans they’ve taken on during the pandemic.
The furlough scheme is understood to have saved tens of thousands of jobs and kept thousands of companies in business over the past 18 months but there are also known to be more than half a million UK companies in financial distress.
“Businesses have another 30 days where government will underwrite a large percentage of their wage bill,” Ms Fisher noted.
“Directors need to use this time wisely, explore their options for resolving any issues they face, and develop a plan for how they’ll address them.”