Gareth Ogden, Partner at haysmacintyre comments on the UK Government announcements offering additional support to hospitality businesses grappling with the financial effects of the coronavirus.
Whilst the headline measures are welcomed there remain serious questions around the detail behind the various schemes and how quickly the necessary funds will be issued. Operators, with no income, are already haemorrhaging cash and facing the break-up of the teams and culture they have invested in and nurtured over many years. This makes the employment support measures promised over the coming days critical to most businesses and the government needs to prioritise this before a raft of redundancies are made.
The availability of loans is a double-edged sword. Borrowing to fund current losses will allow some breathing space if implemented in time, but there will inevitably be complications for those with existing high levels of debt. Ironically for those who were already struggling before the coronavirus crisis, this could represent a “get out of jail free” card although in many cases this will simply be a case of kicking the can down the road for now. Directors are more than ever risking the possibility of prosecution for trading while insolvent.
All businesses should be on emergency footing; indeed one restaurant group I have spoken to is being run as if in receivership in order to survive the uncertainty of the coming weeks and months, even though it currently has a comfortable level of cash for the fight. All cash payments are frozen until the availability of emergency funding is clear and negotiations have progressed with landlords, HMRC and other key suppliers in respect of time to pay arrangements.
For those business that do keep themselves afloat in the short term there are measures that can be taken to alleviate the longer term impact of this crisis. Retaining and engaging with their teams, contributing to their local communities and exploring alternative sources of income, such as delivery or impromptu drive-thrus, may help to maintain the goodwill of their staff and customers for the time when some sort of normality returns.”
haysmacintyre is an award-winning mid-tier firm of chartered accountants and tax advisers acting for over 130 clients within the hospitality sector. The firm uses its experience to highlight relevant opportunities and issues as they arise and communicates these to its clients.
Gareth Ogden is a Partner within the hospitality team and can be contacted at email@example.com.