• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • About
  • Contact

Daily Business Magazine

A magazine complement to the Daily Business website

  • Life, Arts & Leisure
    • Creative
    • Festival
      • Festival Reviews
    • Film
    • Food & Drink
    • Stage Shows
    • Life
    • Leisure
      • Rio Recommends – dog walks and cafes
    • Homes
    • Style
    • Travel
  • Opinion
    • Bill Magee
    • Craig Alexander Rattray
    • Karen Harvie
    • Keith Anderson
    • Russell Dalgleish
    • Terry Murden
  • Interviews
  • Notebook
  • Working Life
    • Careers & Management
    • Finance and legal
    • Technology
      • Tech Talk
    • Well Being
  • Daily Business News
    • All Content

Reopening for business carries a new risk

April 7, 2021 by Derek Forsyth Leave a Comment

Derek Forsyth

Amid predictions of a post-lockdown consumer boom DEREK FORSYTH says it is important that businesses are aware of a big challenge they may face


Bank of England chief economist Andy Haldane recently said more than £180 billion has been saved during lockdown and the UK could see a £50bn consumer boom when businesses reopen. But while thousands of smaller companies will be looking to capitalise on this expected surge in spending they could face a major new insolvency risk.  Moving from being effectively mothballed to full-on trading can lead to a lack of working capital.

Businesses, in particular the hospitality, retail and leisure industries, will have to invest in stock, staff, systems and processes.  During lockdown, many businesses will have had to finance property maintenance costs such as heating, lighting, insurance and inspections.  Furlough will soon finish, and any loans or grants will likely be depleted.

In addition, preparing to start trading again from effectively a standing start will require considerable investment for many businesses and although some will be in the fortunate position that they have cash in the bank, others will be faced with the problem of financing the business opportunities that will emerge during the coming months. 

Government cash has helped businesses to survive, but the next major challenge is that businesses will also need cash to trade and survive the stresses of reopening.

Business owners should plan ahead, avoid trying to operate at full capacity from day one, and ensure there will be sufficient cash on hand to finance daily operations.

Hospitality, retail and staycation providers should benefit from prompt cash payments, but other business sectors could find it takes weeks and months to be paid.  Whilst a consumer spending boom is highly likely, it may not be as large or as swift as has been suggested. 

We would encourage business owners to take a careful approach to reopening, ensure they have updated their business plan and have a clear view of where the cash will be coming from, and when.  

However, business owners who may be concerned that their businesses may not have sufficient funding headroom should be reassured that there are a number of restructuring options available, and the earlier advice is sought the better.

Derek Forsyth is head of restructuring in Scotland at Azets, the UK’s largest accountancy firm specialising in the SME market

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)

Related

Filed Under: Contributors, Derek Forsyth, Finance and legal, Working Life Tagged With: Derek Forsyth, Working Capital

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar



Editor’s Pick

Struan Stevenson

Holyrood must get a grip on the bad bets

Struan Stevenson

… [More...] about Holyrood must get a grip on the bad bets

Bill Magee

Crypto needs rules to rein in volatility

Bill Magee

… [More...] about Crypto needs rules to rein in volatility

Terry Murden

Pay claims still driven by the ‘us and them’ grievance

Terry Murden

… [More...] about Pay claims still driven by the ‘us and them’ grievance

Reston Station

Reston back on track after half a century

Julena Drumi

… [More...] about Reston back on track after half a century

Advertising



Footer

  • All Content
  • Site Map
  • Privacy Policy
  • Facebook
  • Twitter
  • Instagram
  • Email
  • LinkedIn
  • WordPress

Copyright © 2022 · Design by jPAD Consulting · Magazine Pro · Genesis Framework

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT
 

Loading Comments...