By September 2021, the government plans to have phased out furlough permanently, something which hasn’t gone down too well with certain business owners, since their businesses are still struggling financially, and demand has not picked up yet. And let’s be honest, trying to predict the future of our economy is something even the most astute financial minds are struggling to comprehend!
Fewer businesses are prepared to risk the cost of employing new people. This could mean recruitment drives are difficult, and without the manpower to provide key services, certain organisations may struggle to sustain a productive model, capable of actually making a profit. Further to this, redundancies may be necessary if the company is unable to trade profitably.
Multiple redundancies can be very expensive, particularly if the staff members in question have been with the company for a significant amount of time. Junior staff generally come with a paucity of skills to contribute, but tend to have lower wages. On the flip side, senior staff will offer greater levels of competency and skills, but their wages are almost certainly higher, so paying them may be trickier.
With the end of furlough supposedly in sight, you can also bet your bottom Pound that investigations will be made into how furlough was used by certain businesses. The BBC have reported how some MPs want firms using the scheme to be named, offering greater levels of transparency, which is something needed to quantify the losses made through fraudulent claims. This all sounds scary right? Well, there’s nothing to fear if you have nothing to hide!
Such a seismic shift was inevitable, simply because we can’t keep adding to the current £66 billion used to fund this scheme indefinitely. Something had to give, but what happens if you’re now one of many companies who believe this may spell the end? Firstly, be realistic! Can you actually pay staff under these new guidelines? Are you in a position to make the required redundancies to keep your debts manageable? If not, early and decisive action is always best.
Do you think this news about furlough could be detrimental to your business? Are you worried about the future? Then contact RG insolvency, and we can discuss the range of services we offer, helping business owners discover the most appropriate course of action which suits their specific circumstances.