Broadcast Month: January 2018

Subject: The Carillion collapse: are you one of 30,000 businesses affected?

There’s no hiding from the headlines and it’s impossible to ignore the implications - when a company as large and influential as Carillion goes into liquidation, the knock-on effect is huge.

And it doesn’t just impact those working for the company directly.

Projects will now be delayed or ground to a halt, 20,000 staff in the UK stand to lose their jobs and the pressure is on the government – which had 450 contracts with Carillion - to put money into vital services to keep them going. In fact, the latest news from the BBC has revealed that as many as 30,000 smaller firms could be owed money from Carillion - numbers that are both frightening and potentially catastrophic.

So, now that the 2 days of government support have ended, where does that leave small businesses?

Of course, the biggest fear is that many simply won’t get paid…and without any cash flow, that could mean going bust. When a firm enters liquidation, payments are made according to a legal hierarchy, with secured debts paid first and shareholders last. For those at the back of the queue, that could mean thousands of jobs and livelihoods at risk.

What’s more it’s been reported that Carillion were paying suppliers at 120 days. As well as being a clear indicator of cash-flow issues, this extended payment period (far beyond the industry standard) may result in companies needing to re-structure and seek better terms with their suppliers.

It’s easy to assume the future is bleak; according to trade body Build UK around 18% of businesses that were creditors of previous large failed contractors did not survive beyond the first 5 years. A statistic only strengthened by the suggestion that many of Carillion’s suppliers will receive less than 1p for every pound they’re owed.

Light at the end of the tunnel…

Of course, any situation where questions are raised over payment of debts will be met with apprehension, but the key here is not to panic.

There’s no doubt that businesses affected by the collapse of Carillion face some tough months ahead but there are certainly measures that can be taken, and routes investigated, that do not have to mean insolvency for you too. Careful step-by-step processes can ensure that company value is preserved, trauma minimised, and negative impacts reduced.

Surviving financial difficulty is possible and best negotiated with the help of specialist accountants and recovery experts. If you’re concerned about the future of your business, or uncertain what options are available to you, just get in touch with us at Savants – we’re here to offer professional guidance on the rights that you have, and can advise on positive actions available to you to take