Threat of cashflow crisis as costs pile up for eventprofs
Is the sector set to be hit by a cashflow crisis over the next few months?
That’s the question rearing its head now after the government extended restrictions for a further month, but refused to provide any further support for companies struggling to stay afloat.
The current surge in cases of the Delta variant was behind Boris Johnson’s postponement of the 21 June lifting of restrictions, dubbed Freedom Day.
However, the government has signalled that it will not extend the financial help on offer. The Institute for Directors has said this leaves businesses facing “a cliff edge” with a number of new costs fast coming down the tracks.
First up is quarterly rent on 23 June, followed by the lifting of the ban on commercial rent evictions a week later, then on 1 July employers must start contributing 10 per cent towards furlough costs, while the 100 per cent business rates relief tapers off to 67 per cent on the same day.
Many agencies and venues will have very little income until clients pay their invoices – which could easily be towards the end of the summer. It’s a situation that is particular to our sector: most hospitality businesses such as bars and restaurants will immediately have extra cash in the tills as soon as they get fully reopened. Plus, all of this is on top of 15 months of postponements, cancellations and further delayed income.
The HBAA has been highlighting the issue, calling on the government to step in with extra help. Juliet Price, HBAA consultant executive director, says: “Very few, if any other sectors, face this financial issue. An extension to the 80 per cent furlough payment and continued business rates relief would, for many, make a crucial difference to their survival for another month and beyond.
“That’s why, in line with the revised reopening roadmap, the Chancellor should give a special exemption and specific financial support to the meetings, events and accommodation sector for its unique circumstances and issues.”
Another way out would be for the government to write off spent Covid loans for businesses in our sector that have been unable to operate as planned thanks to the lockdown extension.
However, given the deafening silence that has greeted previous calls for sector-specific support throughout the pandemic, venues and agencies would be forgiven for not holding their breath for any further government support.
So does it fall to event planners themselves to take action to ensure timely payments of suppliers? I’ve even heard talk of upfront payments as a possible solution. It’s not how things are usually done, but then, nothing about the last year has been particularly usual.
Most eventprofs understand the need to take a cautious route out of lockdown. But is a cashflow crisis that decimates the sector’s supply chain really a price worth paying?