Trading after furlough: can you afford redundancies?

If you’re concerned about cash flow there are three places to start: salaries, property and finance. Mark Thompson, partner at Shakespeare Martineau in Milton Keynes, explains.
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Published 29th Sep 2021, 13:12 BST
Downsizing your team is not necessarily the best way to cut costs.Downsizing your team is not necessarily the best way to cut costs.
Downsizing your team is not necessarily the best way to cut costs.

Salaries

Often the biggest cost to business, it can be easy to think that cutting headcount is a simple way to saving money. However, you need to calculate the costs of redundancies. Profile the team – which, if any, of these roles could be automated, consider how long they have served with the business, what pay will they be entitled to and how much capital will you need to honour these payments? Is there a better time in your trading cycle to make redundancies when cash reserves are higher?

Property

A review of your property portfolio may also be something to consider.A review of your property portfolio may also be something to consider.
A review of your property portfolio may also be something to consider.

If your workforce is at the right level and redundancies aren’t a viable option, consider reviewing your property portfolio. If it’s no longer fit for purpose, consider your options: review your contract terms; when are the break clauses, can your legal advisor help you renegotiate rent rates as a temporary stop-gap?

If the property is owned by your business freehold, release equity by selling the property and becoming a tenant.

Financing

To unlock cash in order to get the business fulfilling orders, you could consider invoice finance to support the supply chain.

Are there assets in the business such as plant, machinery or stock that you can get assets-based finance on to raise money?

Review the rate of interest on your business overdraft – is there a better deal to be found elsewhere?

Act now

Every business is different but in order to survive long term, take action now.

You can get more detailed advice for your business at www.shma.co.uk or call 01908 696 002.

Related topics:Mark ThompsonMilton KeynesProperty