The government has provided multi-billion-dollar pandemic financial assistance programs to companies, but much depends on whether they accept help. How does the CFO decide? The pandemic has had a devastating impact on thousands of businesses in the UK, causing Prime Minister Rishi Sunak to hose the economy with amazing amounts of money.
According to data from HM Revenue & Customs, £49.28 billion has been issued through the Coronavirus Job Retention Scheme (CJRS), by December 31, 2020. The four major plans approved on January 24 2021 received a total of 71.79 billion pounds of government-backed loans.
Carefully Consider
Chief financial officers and other senior financial professionals must carefully consider what is required, how the money will be used, and how receiving government assistance will affect their reputation as a company.
The directors of several large companies were criticized after accepting the government’s salary cuts. They accepted government support to pay workers on leave, but then received generous incentive plans (long-term) to achieve their goals.
At the same time, Tesco announced that it will cooperate with the government to repay the operating expenses of 585 million pounds saved due to the Coronavirus business rate reduction program. This is because its sales have actually increased during the lock-in period and have already paid shareholders 315 million pounds.
Government Assistance
What factors did CFOs consider when deciding whether to seek government assistance, did they receive cash, and what other measures did they take to ensure the liquidity and viability of the organization?
Chief Financial Officer, Chris Carney said: “In April 2020, Taylor Wimpey decided to use the government’s CJRS to help the company achieve long-term sustainability, as a preventive measure, as the lock-in began. The outlook was uncertain at the beginning and during the first wave of peaks. He worked closely with other board members to formulate the company’s strategy.
Decisive Action
“In uncertain times, it is vital to take decisive action early to protect the company’s liquidity and flexibility, and to prioritize the needs of employees and wider stakeholders,” added Chris Carney.
By June 1, all workers of Taylor Wimpey had resumed from furlough. “Under the background of stable trade and business strength, we think this is correct. Carney said that despite the short-term instability, we are confident that the company is in a favorable position and the market environment will continue to remain optimistic,” noted Chris Carney. Although freelancers complain about little help, some small businesses feel that they receive less support than large businesses.