Covid-19 Debt Advisory

The speed with which COVID-19 has spread globally and in Ireland, along with government measures to contain the virus, means there will be a significant financial impact on businesses. As with any crisis, there will be both opportunities and challenges.

  • Banks will focus on supporting customers through their various product lines
  • To support customers, banks have accelerated their decision-making process in light of the situation

Having held discussions with a number of banks and lenders on the subject, we would encourage companies to undertake the following

 

Short Term - Do’s

  • Avail of not paying PRSI and VAT to revenue as no interest or penalties on late payments (continue to file returns) and it won’t affect your tax clearance cert. An easy short term cash flow help.
  • Check Government supports – SBCI have a C-19 loan scheme ready for applications. See the following link - Government supports for COVID-19 impacted businesses

Cashflows

Constantly assess and review your current and projected cashflows. Trading is changing daily and it will be important to monitor cashflows (working capital etc.) and their assumptions on a daily basis. Model and understand worst case scenarios so you know your funding needs.

Analyse

  • Banks will require clients to analyse at least two scenarios, that COVID-19 lasts for (i) 3 months and (ii) 6 months, and assess their cashflows over the next 12 months in both scenarios. This will assist in expediting credit decisions. Remember, your Bank will have multiple applications so prepare and make it easy for them.
  • The analysis should show capacity to recover from the crisis, measures you have taken in terms of headcount and other cost savings (rent etc.), and ability to return to normal trading over a 12/18 month period.

Funding

Review existing bank facilities, engage proactively with your relationship managers, discuss measures such as capital repayment options, extensions to short term credit facilities and the potential to increase prepayment rates on working capital facilities (invoice discounting for 120 day debtors, 95% of debtors).

Communicate

Early communication with your funders is vital in order to understand your options and the timing for any amendments to existing facilities.

Alternative Funding Options

Existing lender vs. alternatives – Your existing bank will seek to support you in this crisis. In addition, Ireland has an array of specialist lenders who could also assist if the requirement is outside your existing banks appetite.

We Are Here To Help

Use your advisors - banks will take comfort that there has been a full review of the operations of the business and that the scenarios have been considered and tested by an independent party. It will speed up the process. Go to our Mazars Covid-19 support page for more information.

Document

Mazars Covid-19 POB Approach

Mazars Covid-19 POB Approach