28 April 2020: As Matt Hancock, Secretary of State for Health and Social Care, announces that he is happy with some businesses re-opening, decision making for directors during these challenging time is immense.
There are many businesses that stopped trading at the end of March to safeguard their staff, as social distancing was not possible in their work environments. Opening the door again to employees is one hurdle that they have to overcome and some of those businesses have now put provisions in place and adapted working environments in order to comply with social distancing requirements.
The next hurdle is providing the work flow that is needed to fulfil orders. Supply of materials and products from overseas have been heavily disrupted and, consequently, businesses may not be able to fulfil customer orders. The disruption to supply chains may quickly develop from being temporary to permanent if all those in the supply chain run out of cash and fail to deliver.
Adapting to measured flexible relationships in the supply chain, whether it be with suppliers or the customers, is the resilience required for survival. With the temporary suspension of wrongful trading provisions, directors have been given some flexibility to continue trading with financial difficulties and not be held personally liable. However, even though wrongful trading provisions are suspended, all other obligations and statutory responsibilities of a director remain and, therefore, directors need to be vigilant. It is now, more than ever before, extremely important for directors to keep a close eye on their cash on the road to recovery.
Directors of businesses facing financial difficulty and under immense strain can speak to any one of the team of experts at BRI. We will help explore options, consider and evaluate different eventualities and assist in mapping out how the road to recovery may look.