The sudden placing of British Steel into compulsory liquidation is deeply worrying, not only for its employees and customers, but also to the thousands of other businesses in its supply chain, many of whom are owed very substantial amounts and will be concerned as to when, or indeed if, they will be paid.
It is estimated that, in addition to the 5,000 direct employees of British Steel, there are in the region of 20,000 jobs potentially affected in its supply chain. The concern is that, in a worst case scenario, the contagion could spread, potentially resulting in a “domino effect” of business stress and even failure as other businesses, whilst not directly exposed to British Steel, are nevertheless affected by cutbacks and reduced orders from companies that are higher up the supply chain.
What to do? Firstly, take stock of where you are at the moment. Are you owed money by British Steel or do you have any unfulfilled orders from it? Secondly, does your business have credit insurance for unpaid or overdue invoices – according to the Association of British Insurers, trade credit insurers provide more than £4.5 billion worth of cover on credit for firms supplying to UK steel manufacturers. Thirdly, regularly check on the webpage on the Insolvency Service the webpage for the Insolvency Service and subscribe to receive an email alert when updates are available and notify EY, the Special Managers appointed to assist the Official Receiver with his duties as liquidator.
Fourthly, if your cashflow becomes critical due to non-payment by British Steel, seek professional advice as to your options, including whether to open a dialogue with your own key suppliers and other stakeholders (such as whether to seek to negotiate a Time to Pay (TTP) arrangement with HM Revenue & Customs. Fifthly (and for the longer term), explore whether diversification of either your own customer base or product offering is feasible, as reducing reliance on a principal customer, product or service line may well improve your business’ resilience in a turbulent trading environment.
If you are affected by the liquidation of British Steel (or any other business) or would like further information, please contact Neil Harrold, or call 0191 232 8345.