John Highfield

Member Article

Christmas offers little cheer to struggling businesses

CHRISTMAS is usually seen as a time of cheer and good will but for companies struggling for survival in the wake of the COVID-19 pandemic, the Festive season might just represent the last hope.

Financial expert Deborah Lockwood, of Sheffield business turnaround and insolvency practice Graywoods, says that many companies will probably see the Festive season as no more than the end of a crisis year.

“They’re holding on, setting the Christmas period as a marker simply because they don’t want to face some difficult decisions before the holiday,” she said.

“The run down to Christmas usually starts from early December but my guess would be that this year we will see that feeling commencing much earlier.

“Struggling owners are thinking they should hold on at least over the Christmas period, perhaps thinking that business will start to pick up in the new year.

“And there’s also the psychological factor - nobody wants to think about having to start making staff redundant in December.”

For both those reasons, Deborah added, many companies were putting off making difficult decisions.

“In January, however, you are staring headlong into a new year,” she pointed out.

“The one good thing about things as they are right now is that many creditors - and particularly HMRC - are not actively and aggressively pursuing companies at the moment, so again that provides a pre-Christmas breathing space. But this is all it is and does not deal with the problem.

“Many business owners are not facing up to the reality and the extent of their position financially though and it doesn’t help that the region, and the whole of England, has gone into a further lockdown, with many people having to work remotely and using it almost as an excuse to hibernate.

“It is true that a number of small businesses will struggle on through the holiday period, paying staff through the Christmas shutdown and also discovering that some businesses will use the Christmas period as an excuse not to pay outstanding bills.

“But for a company already facing a crisis, that delay can be critical and with tax bills to be paid by the end of January, it might seem that insolvency is the only possible action.

“Add this to COVID-19 and even the continuing period of political uncertainty caused by Brexit concerns, and you have an atmosphere that brings no Christmas cheer to an already nervous business community.

“The reality is that neither remote working nor slowing down for Christmas will protect a struggling company -at best it may delay matters.

“The best gift any boss could give to themselves is to face reality and seek the advice that could help them and their staff negotiate their way to a brighter future.”

This was posted in Bdaily's Members' News section by John Highfield .

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