The announcement of school closures and other restrictions on public gatherings by the Government has the potential to create significant financial difficulty for businesses.
Those businesses reliant on customers coming to them, especially in the retail and hospitality sectors, are likely to be most vulnerable.
Those businesses which have the comfort of cash reserves should be able to weather the storm. However, businesses living hand to mouth are less likely to be able to meet their day-to-day obligations.
If these businesses are to survive, it is essential they are proactive about cutting outgoings so they can survive after the coronavirus pandemic has ended.
Businesses which temporarily need to reduce staff costs may need to consider putting staff on temporary lay-off or short time. These are arrangements that fall short of redundancy but still enable employees to collect social welfare benefits while they are not working.
If employers decide to go down this route it is important they follow the correct procedure, as otherwise they could still be liable to pay wages and their employees would not be entitled to obtain benefits. Employers are obliged to give formal notice of short time or lay-off by way of form RP9, which is available from the Workplace Relations Commission website (in the redundancy forms section).
Where not all staff are temporarily laid off or put on short time it is necessary to operate the same selection procedures that would apply in a redundancy situation. Employees who are temporarily laid off or put on short time have the right to apply for redundancy instead.
Business owners should also contact their insurance brokers to see if they have business interruption insurance which might cover them for loss of income.
It is essential business owners in difficulty engage with their creditors at the earliest possible stage to see if some accommodation can be reached. These might include landlords abating rent temporarily or banks deferring loan payments. Certainly, the message from banks so far has been that they will be accommodating as far as they can.
Revenue as a general rule will agree to instalment plans with taxpayers who fall into temporary difficulty, although businesses which have had difficulty paying their taxes for an extended period are unlikely to be able to benefit from this.
When the dust settles it may be that otherwise viable businesses have incurred liabilities they are unable to be able to trade out of. The prospects for these businesses are not necessarily bleak.
It may be that owners can avail of provisions in the Companies Acts to implement a scheme of arrangement whereby their liabilities to all creditors are reduced so the business can continue.
If business owners are to implement one of these schemes it will be essential they do it promptly while they retain the goodwill of their creditors and the memory of the events that created the problem are still fresh in people's minds.
Sunday Indo Business