There is no doubt that the effects of the liquidation of Carillion, the UK’s second largest construction company, are being felt by many other businesses in its supply chain throughout the sector in the UK and Ireland.
The current pressures felt in the industry have left many subcontractors and suppliers with short-term cash flow issues. Whilst in many cases the underlying business is profitable, working capital constraints divert management attention away from the general operations of the business and key strategic tendering opportunities.
While it may seem that the industry is facing a period of uncertainty, the changes that the sector is experiencing present the opportunity for businesses to review their existing financing arrangements and to explore other options. Those businesses who can successfully navigate the challenging market conditions will undoubtedly emerge as stronger players with leaner and more efficient cost structures.
In welcome news for the sector, the Government have announced support to businesses through the Enterprise Finance Guarantee. The British Business Bank have recently announced that an extra £100million has been made available to specifically help businesses affected by the liquidation of Carillion.
The overarching provisions of the scheme are that it is aimed at small and medium businesses, which may not have the security needed for conventional bank lending, and the Government guarantee 75% of the lending which is provided by over 40 accredited lenders.
The guarantees can be used to support overdraft borrowing and refinancing of existing debt.
There are also other options available to companies and individuals including:
• Agreeing a ‘Time to Pay’ arrangement with HMRC for VAT and PAYE
• Informal and formal arrangements with creditors
• Asset finance
• Traditional bank lending
• Alternative finance providers
Key to a successful financing strategy is to address the issues head on, make a focussed plan for a sustainable recovery and seek professional advice as soon as possible. Early advice and acting quickly is often integral to the implementation of an effective turnaround.
HNH Group are specialist advisors to personal and business clients of all sizes and would be happy to discuss any of the above on a confidential basis.