19 June 2021

Weathering the Perfect Storm

Print and packaging firms are currently caught up in a perfect storm of cash flow pressures. Not only are Covid-19 support schemes being tapered off as the Government comes calling for loan repayments, there’s also VAT deferment and – in many cases – shelved landlord payments to catch up on too. In addition, there’s sectoral pressures in the shape of increased materials costs, and potentially deferred creditor action waiting in the wings.

This storm has been brewing for a while. Although print sector insolvencies have, on the whole, remained low over the last 12 months, it’s the next 12 months that will truly test the foundations of all SMEs in the sector. As the furlough scheme is wound down and the realisation sets in that repayments are due for Bounce Back Loans and CBILS, we expect more businesses will struggle and some to go through a process of administration to restructure in an attempt to survive in the long term. Some will, regrettably, fall away without being able to lean on the crutch of government support. Many of these will have been on the brink for many years, and now left in an insurmountable position.

Early action is key. If companies can see that there is trouble over the horizon – and there are many business owners that will be crunching the numbers and finding themselves coming up short – we would suggest seeking advice as there are many options available for businesses to give them a reprieve or reinforce their business for the long term through an injection of finance or solutions such as a CVA. We’ve also been seeing investor and acquisition activity in the print sector for SMEs, so it is worth getting advice and options from a business adviser. 

If your business is struggling to service its outgoings - whether as a direct result of the coronavirus crisis or due to existing issues - or if you are concerned as to how viable your business is going forward, an experienced business adviser can help you understand your current position and the options open to you. 

That can include a wide range of options from funding, buy outs, CVAs or Fast Track CVAs, which functions as an accelerated version of a standard CVA, providing the same level of long-term stability and certainty for companies and creditors alike, all achieved within a quicker time period and requiring less professional intervention.

An additional form of relief can be a Time To Pay arrangement. This could provide the respite you need in these challenging times. The arrangement is a method of spreading your business tax payments over a longer period of time in a more affordable way. An agreement is reached between the business and HMRC in an attempt to provide some breathing space to the business and allow cash flow to improve. Business advisory experts can put together a solid proposal, which takes into account your company’s financial resources along with the level of outstanding tax debts you have. Through our strong relationships with HMRC, we know exactly how to present your case to those that matter as well as understanding what information they will want to see.

Of course, the long-term effects on the sector are still to be determined. If survival isn’t possible, the one crumb of comfort to the industry is that viable, promising companies can help to mitigate job losses by sweeping up the business they leave behind and taking staff on in new roles, which was a common by-product of the 2008 recession.

Regardless of the operational difficulties you might be facing at present, our expertise is just a phone call away and our suite of services means we can usually find the most efficient solution. Hopefully, by taking early advice, we can help shield your business from the storm.

Article by Graeme Lipman. Graeme is a finance specialist and director at BTG Advisory, with a wealth of experience working with a variety of printing and packaging firms, from independent high-street operations to major multinational printworks.

https://www.begbies-traynorgroup.com/