Survival strategies for UK businesses in a second lockdown

Across Great Britain, 36,209 retail-related outlets emerged from temporary closure after the first lockdown, analysis conducted between 1 August and 30 September by the Local Data Company on behalf of PwC has revealed. However 5,552 stores of multiple outlets remained in limbo - temporarily closing during the first lockdown without reopening as yet - underlining the uncertainty businesses are addressing as the latest lockdown unfolds. 

The amount of real estate that is still temporarily frozen nationally after the last lockdown is equivalent to 888 acres of retail real estate across high streets, retail parks, shopping centres and other locations - or 36 times the size of London Waterloo station. Under the new lockdown restrictions, businesses retain the ability to offer takeaway and click and collect services. However, the “frozen” footprint may still increase markedly with temporary closures across non-essential retail. This raises significant restructuring issues for businesses as to what remains open, which parts close and how much more of their estate remains in stasis longer-term once lockdown lifts. 

Restructuring experts at PwC have analysed the liabilities businesses amassed across the collective 38.7 million square feet of their estate which were already temporarily closed - and the potential impact on approximately 30,000 outlets that could come under the classification of non-essential retail.  

“Arguably now, more than at any other time in decades, retailers are facing a battle to preserve the cash and liquidity needed to steer them through the next few months," said Zelf Hussain, retail restructuring partner at PwC. "Businesses, especially pubs, bars restaurants, gyms and cinemas for example, are now focused on surviving the short-term, stemming further permanent closures and being ready to take full advantage of the shortened Christmas trading period - if and when lockdown is lifted. However they have the ultimate dilemma, given the pressure on businesses to batten down the hatches and drive down costs - all while trying to maximise revenues and stay solvent. Additionally, once they have stabilised their businesses they will pivot to dealing with the wall of liabilities - deferred payments to suppliers, landlords and HMRC that will have been built up through the crisis period.”

For many businesses in retail and other impacted industries there are a number of common challenges arising. As a result, PwC's key checklist for businesses includes: 

• Dealing with unclear cash positions and cash forecasts, including currency effects.
• Developing robust contingency plans and ‘what if’ scenarios to model impacts (e.g. cash needs, changes in customer demand, failure in the supply chain, withdrawal of credit insurance, restriction on cross border payments, changes in regulation or other business shocks.
• Collaboratively addressing relationships with struggling customers who have liquidity issues/financial instability.

“Businesses, especially those in the retail, hospitality and leisure sectors have to balance a number of spinning plates," Hussain added. "They are faced with a complex task of working out how national restrictions impact multiple outlets and venues in locations which may be operating under different rules as we come out of the latest lockdown and back into the Tier system. Operationally - workforce redeployment, downsizing and potentially mothballing more operations will be at the top of firms' agendas. Additionally, businesses including retailers securing finance against their stock and inventory also have the return of the Crown Preference to prepare for next month. Lenders can now be trumped by HMRC in the pecking order, which could lead to tougher or reduced lending terms, putting further pressure on the balance sheet.” 

 

Switzerland launches Green Fintech Network

Switzerland's Federal Council sees sustainable finance as a great opportunity for the Swiss financial centre. The combination of sustainable financial services and digital technology (green fintech) is particularly promising. For this reason, the State Secretariat for International Finance (SIF), together with industry representatives, has launched the Green Fintech Network.

The aim of the Network is to ensure close cooperation between SIF and key specialists from the Swiss green fintech ecosystem. Accordingly, the main industry players are represented in the Network:

• Green fintech companies.
• Green fintech associations.
• Risk capital firms.
• Universities/universities of applied sciences.
• Consultancy firms and law firms.

The Green Fintech Network's mandate is to identify areas in which the conditions for green fintech in Switzerland could be improved. The Network should then submit concrete proposals to both the government and the private sector. Finally, the Network should assist in the implementation of measures. The results of the Green Fintech Network's initial activities will be recorded in an action plan, which is due to be published in spring 2021.

 

UK small businesses offered iwoca's invoicing product free during lockdown

Small business lender iwoca has announced that its invoice payments product - iwocaPay - will be free throughout the UK’s second national lockdown to support small businesses impacted by coronavirus.

The solution allows small businesses to be paid upfront while letting their customers spread their costs over 90 days. The news comes as the number of times small businesses offered iwocaPay to their customers grew 700% during the initial lockdown, as well as an 85% spike in the number of small businesses using the product. 

As the UK has now entered a second lockdown, iwoca decided to make its product free to help SMEs stay in business and keep cash positive. Usual fees for sellers and interest charged over the 90 day duration of the product for buyers will be dropped. Sellers will get 100% of their cash upfront for their invoices whether they are new or outstanding. 

The fintech lender carried out research in June which revealed that 40% of B2B suppliers were owed more than £10,000 in outstanding invoices in the first lockdown with a third of small businesses lacking any confidence that they would ever get paid. Within the same period, a quarter of all UK businesses (of which SMEs represent the majority) ceased trading, and over half of those that continued to trade saw a fall in turnover. 

The solution is available to all limited companies and sole traders in the UK for invoices between £150 and £15,000. Suppliers get paid up front and their business customers can spread the cost over up to 90 days.