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Irish SMEs are on a rollercoaster due to the continued disruptions caused by Covid-19 and the looming real unknown impact that Brexit will have in 2021 and beyond. That said, SMEs have shown resilience as demonstrated by the agile way in which they have responded to events so far this year.
SMEs remain compliant in their relationships with the Revenue, the CRO and other regulatory bodies. They continue to engage with their other key stakeholders, including providers of finance and key trading partners. SMEs are reluctant to take on additional debt, which is understandable as they have invested heavily in their operations in recent years, coupled with disruptions which are causing uncertainty to creep in.
In 2021 SMEs will need to continually monitor their liquidity, with the cashflow statement and projections becoming the priority financial information. You can be making profits or indeed losses but you can only run out of cash once! Weekly cashflow management and constant review of your working capital has to be a priority, and the impact of Covid has proved that this is indeed the case. If a lack of cash is the only topic on the agenda in a business, it can be fatal.
SMEs should not shy away from engaging early for legal and financial advices if matters are starting to overwhelm them. FitzGerald Legal & Advisory LLP, located in Lapps Quay, Cork, understands the importance of tailored and skilled professional representation.
According to managing partner Sean O’Riordan: “Early engagement provides for more options to be considered and robust solutions to be implemented. Ongoing communication and transparency with all stakeholders, both within and outside the business, is key. The impacts of the disruption that Covid-19 has on business life and the unknown impact of Brexit will continue to cause changes to business. Therefore there is the need to always be communicating the impacts that evolving changes are having on your business.”
To date, business failures have been low and centre around retail which had been extremely challenged prior to Covid due to changes in consumer buying habits and trends. The reality is that as we move through 2021 and beyond there will be more restructuring and insolvencies.
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David Swinburne adds: “An underutilised option in this country is Examinership. It is often not considered as it is viewed as being too expensive. However, if you engage early and if the fundamentals are there, then it can be a viable option. If a business has a solid core business worth saving, has sufficient cashflow to get it through the examinership period, and has the real prospect of securing investment to support its solid business, then it should be looked at. There are also other formal and informal schemes of arrangement that can be explored, but early engagement is key.”
Being agile and resilient to the shocks, twists and turns that will be coming is a must in order for SMEs to survive. For companies on shaky ground, looking at their restructuring options around examinership and schemes of arrangements should be in the mix. In our experience, exploring the prospective outcomes of these restructuring options with clients and presenting them to their stakeholders has resulted in all parties working together on a consensual, informal way forward.
FitzGerald Legal & Advisory LLP provides highly skilled legal and advisory representation. Call us on 021 427 9800 to arrange an initial consultation for advice on options and solutions that may be available to you.
6 Lapps Quay, Cork
Tel: 021 4279800
Email: law@fitzsols.com
Pictured: FitzGerald Legal & Advisory ppartners (l-r) Sean O’Riordan (Managing Partner), Sinead McNamara (Partner), and David Swinburne (Chartered Accountant, Advisory Partner)
