While 60 percent of businesses have plans in place to support their reopening, liquidity will be key to the viability of SMEs regionally in the Midlands and throughout Ireland in the coming weeks, according to former Chairperson of the ACCA Midland Network, Coliosa Wallace, partner of Hardiman Wallace Accountants, Athlone.
The professional accountancy body has said its research reaffirms the need for SMEs to plan for their approach in securing appropriate level of liquidity throughout the re-opening period with government support on rates, grants and VAT and PAYE warehousing requiring significant administration and lead times. Businesses could be open within a week, yet it may take much longer to get access to the cash that the reopening will require.
Commenting, Coliosa said the management of liquidity will be key to business viability in the coming weeks.
“Depending on the nature of the cash cycle in the business, some businesses could need as much as three times their first month’s sales in upfront working capital and once again this process takes time, so seeking all avenues to maintain cash reserves will be key.
“Asking for an extension with creditors or negotiating reductions in outstanding debts may help. If they haven’t already, businesses should seek the Government’s support of between €2,500 and €5,000 to assist with the cost of preparing to restart as well as the Government’s assistance in terms of getting access to grants and consider whether they need, and are eligible for, the 80 percent state aid backed loans.”
This announcement comes in light of the governments phased easing of lockdown measures which will see most businesses return to some form of opening in the coming weeks and months. All of these interventions require planning and paperwork to be expedited as there will be administrative impediments beyond the control of firms and while businesses could be open within a week, it may take much longer to get access to the cash that the reopening will require.
“At ACCA we have asked the Government to ensure that the various state agencies provide assistance and simplify the application process, while mitigating exposure to fraud. There is also no avoiding that the impact this crisis will have on companies and the very human cost to some employees,” Coliosa continued.
Coliosa, has said the Midlands has always maintained a robust retail trade and strong tourism industry including landmark hotels and popular pubs and restaurants. Protecting these vital areas as well as our other smaller sectors will be essential to our regional recovery.
“The pending closure of the Shannonbridge Power Station has also had a knock on effect on local businesses. Our local members have prepared as well as possible for the reopening of the economy though they will be aware that managements need the agility to adapt and change and they need to have a business plan that has sufficient flexibility and robustness to cope with the new business environment whatever that may bring,” Coliosa concluded.