Coronavirus Cash Crisis - A Cause for Concern and Could Cause Closures

A little bit of alliteration for you there in the title, but light hearted word play isn’t exactly the order of the day for more than half a million UK firms who are staring down the barrel of closure within the next three months.

Why three months?

Well, according to research carried out by the Institute for Public Policy Research (IPPR) as many as one in three UK businesses currently have less than three months’ worth of cash reserves in the bank, placing them firmly in the danger zone.

A staggering nine million jobs are on the line here, and you can probably guess which industries have been hit the hardest...

The research showed that half of all firms in hospitality, food and other services found themselves in this bracket, as did 40% of firms in the arts, entertainment and recreation sector.

Everything that falls into these categories has been closed and then open and then closed again, over the last year, and so there really are no prizes if you guessed which industries were really struggling with cash flow.

Business support schemes have been in place ever since March, but the words of Rishi Sunak when he said that the Government would do ‘whatever it takes’ have long since been replaced by ‘we can’t help everyone’, and businesses with less than three months’ worth of cash flow might be feeling like they’re the ones who need the most help right now.

Cash injections could offer some vital breathing room, but are the Government really going to dig further into the coffers now?

Especially when there are billions of pounds in Bounce Back Loans that they’re already preparing to write off.

Transferring liability to the actual lenders, for a fee of course, could be a method that the Government use to find more money to support businesses in dire need of the help, but no matter what happens, a lack of cash in the bank means that many firms are teetering ever closer to the edge of the cliff.

And that means closure.

All eyes will be on Boris Johnson come 22nd February, as he outlines the country’s next instalment of a ‘road map out of lockdown’.

So many firms will be hoping that it is clear, covers their particular industry, and ultimately, that it doesn’t prove to be yet another false start, as their future really does depend on it.

More than ever, Cash is King.

If your reserves are running out, cross your fingers that it’s good news at the end of February.


6 views0 comments

The statements and opinions expressed in this article are those of the author and do not necessarily reflect those of Court Enforcement Specialists.  Comments are welcome. However, the blog owner reserves the right to edit or delete any comments submitted to this blog without notice.  The author will not be held responsible for any comments posted by visitors to this site. The author is not responsible for the content in comments.  

Court Enforcement Specialists does not take any responsibility for the views of the author.  Please note this blog is not to provide specific legal advice.  This blog disclaimer is subject to change at anytime.