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Home Page > Business > Human Resources > Alternatives to UK Redundancy!

Alternatives to UK Redundancy!

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Posted: Apr 30, 2009 |Comments: 0
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In the wake of the economic downturn, businesses of all sizes are experiencing a downturn in business. Some of the larger retail chains have gone into administration and many are still struggling, while many other businesses across all sectors are making job cuts.

It’s a tough period for the economy, and it might even get tougher in the coming months. So what do you do if you run a business and are finding it difficult? Well, the easy option for most employers is to make redundancies, but is this really the best option? Of course, if there is less work to be done, or the need for fewer employees to do the work, then there is obviously less requirement for employees and redundancies may be the logical choice.

There are, however, disadvantages as well. Firstly, negative publicity from redundancies can affect the business, especially larger ones, to the point where the adverse impact may override the savings made through the redundancy process. In addition to this, the one-off payments made to the unfortunate people who are losing their jobs can affect the cash flow of the business, which can cause obvious problems. Perhaps most importantly, there is also the issue of losing a skilled workforce. Most employers invest significant sums in training and developing their workforce, and redundancies mean that these investments go overnight.

But what are alternatives? Employers don’t generally consider redundancies unless they can see no other option. However, there are numerous ways in which employers can reduce staff costs without necessarily making redundancies. These include the options of Lay Off and Short Working Time, changes to Terms and Conditions of employee’s contracts, changes to Pay, Overtime, and Discretionary Benefits, Sabbaticals, and Retirement.

Lay Off and Short Working Time is essentially a reduction in work that can effectively reduce the employee’s pay for a week by more than half. This, of course, reduces staffing costs. Under the Employments Rights Acts 1996, the employer must propose a reduction of 50% or less in the employee’s hours.

Generally, this is appropriate with regards to a temporary reduction in work, such as seasonal work. Employers must, however, have an express contractual right to do this, or, alternatively, have obtained the employee’s agreement. Without this, an employee may be able to claim, for example, constructive dismissal, as a breach of contract has occurred. The rules can be complex, and it is best to seek professional legal advice before implementing any such changes.

If proposing a reduction of 50% or less in employee’s working hours, the correct approach is generally to change some of the Terms and Conditions in employee’s contracts relating to pay and hours. This can also be used where no contractual right for lay off or short working time. Nonetheless, it pays to be cautious here as changes often rely on flexibility clauses and any ambiguity will be construed against the employer by the courts. Again, it is important to seek professional legal advice if considering such actions.

In terms of Pay, Overtime, and Discretionary Benefits, an employer might reduce staffing costs by implementing a freeze on pay rises or a ban on overtime working. Before doing this, however, employers need to be careful that they are well aware of any contractual rights the employees may have in regards to pay increases or guaranteed overtime working. It is rare that employees do have such contractual rights, and therefore implementing such a strategy is usually straightforward.

Withdrawal of other so-called discretionary benefits such as bonuses, incentives, share options and allowances is another popular way of cutting back costs. However, caution should again be taken when deciding whether such benefits are, in fact, discretionary or contractual. Professional legal advice would once again not go amiss.

Other options include employees taking a sabbatical, which is an agreed period of unpaid leave from work, or retirement. Both options have their benefits and disadvantages, and again they must both be done by the letter of the law to protect the employer.

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Alison Carter -
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John Mehtam is an experienced Employment Law Solicitor and specialises in Employment Law Advice from Shropshire based Alpha HR of Martin Kaye Solicitors.

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I’ve had a really hard time getting a job. Is there any program out there that can help? Two of my loans went in to default. I owe about $8000.

Some places I have found that I like say no FHA loans in the listings.

Also, I wouldn’t mind a house that needs a little minor work but I have heard FHA loans are very strict about the inspections.

The number one worry for managers and owners of companies undergoing a chapter 11 bankruptcy restructuring is: will my business survive? Of course they do have many other worries such as meeting with creditors, creating a turnaround plan, paying employees on time and working with suppliers. One way to ensure the success of the restructuring and the survival of the company is to obtain bankruptcy financing, also known as debtor in possession financing.

DIP financing can help provide the capital liquidity to pay operational costs while the company looks to turnaround the current situation. The problem is that unfortunately, few institutions offer business financing to bankrupt companies. If getting a business loan under normal circumstances is hard, looking for business loans while going through bankruptcy is close to impossible. So, what alternatives are there for medium sized companies?

Factoring financing, also known as invoice factoring, is a viable alternative for debtor in possession financing, especially for small and midsized companies. It solves a very specific problem. Companies that sell to other businesses usually have to wait 30 to 45 days to get paid on their invoices. This can create a serious liquidity problem for companies facing insolvency. Accounts receivable factoring advances funds on these slow paying invoices, providing the necessary capital to operate the business.

A factoring company will usually advance about 80% of your outstanding accounts receivable within one business day of invoicing. The remainder 20%, less the financing fee is advanced once the invoice is actually paid for. Factoring companies will also help you evaluate new customers to determine if they are credit worthy. And of course, if you decide to factor new customers, you won’t need to worry about waiting 30 to 60 days to get paid either.

Obtaining factoring financing is fairly straight forward. The biggest requirement is that you must do business with credit worthy companies. Aside from that, you must have a reorganization plan that brings your company back to solvency. And lastly, the court will need to approve the financing relationship.

Are you selling goods or services both in the US and internationally? Then you know that finding the right financing tools is critical for the success of your business. Although finding the right business financing for US based transactions is not simple. Finding the right financing for your international transactions can be exponentially more difficult.

The most common tool used in overseas transactions is the letter of credit. A letter of credit is a payment vehicle that guarantees payment to suppliers and ensures that clients get the products/services they contracted for. The challenge with letters of credit is that they are as hard to get as a business loan. If you or your business cannot qualify for traditional bank financing, then more often than not you won’t be able to get a letter of credit. Unless, of course, you find an alternate business financing tool.

This is where factoring and purchase order financing come into play.

Factoring financing has been around for a very long time. But only recently has export financing (or international factoring) become a popular tool to finance international trade transactions. Factoring is a way to help business owners who cannot afford to wait 60 days to be paid by their international customers.

Factoring provides you with financing based on your international invoices from credit worthy commercial customers. Basically the factoring company advances you up to 85% of your invoices and holds 15% as a reserve. The factoring company waits to get paid while you get use of the funds. The remaining 15% (less a fee) is rebated as soon as your international customer pays the invoice. Furthermore, most factoring agreements will protect you from the credit risk.

Purchase order financing is a bit different. It helps distributors, resellers and wholesalers who have large purchase orders but can’t afford to pay their suppliers. The PO financing company covers all supplier expenses and helps with the delivery of the goods. The transaction is settled as soon as your customer pays the invoice.

As opposed to most business financing options, factoring and purchase order financing are easy to obtain and can be set up quickly.

There are traditional banks and lenders offering car loans and non traditional lenders too offering car loans for people with bad credit or financial difficulties. Thus anyone seeking finance to purchase a car can get approved with significantly lower costs than financing with a car dealership the purchase of the vehicle.

Car Dealership Financing’s Drawbacks

Financing through a car dealership can be extremely expensive. The interest rate charge by dealerships is almost doubling the interest rate charged by traditional lenders. These high prices are due to the fact that when you resort to car dealerships for financing there is a third party that provides the funds. Thus you are paying for the services of two roles: The actual lender and the intermediary.

Besides, car dealerships only offer financing for the cars that they sell. Thus, your options as regards to brands and models are limited. And if you happen to find a private lender offering for sale the car of your dreams at a very advantageous price, you can never resort to a car dealership in order to get the funds for purchasing the car.

Traditional Lenders and Banks

Banks and traditional lenders offer finance for car purchases at very reasonable rates. Car loans are secured loans and thus carry low interest rates compared to personal loans that are unsecured. However, in order to get approved you need to show proof of a clean credit report and a steady income that will let you afford the monthly payments.

A car loan offered by a traditional lender will let you purchase any car you want and also if you visit car dealerships after getting approved for a car loan you can always bargain the price of the cars with the dealer and have more options as to the brand and model of the car that you’ll purchase.

Non Traditional Lenders

Car loans offered by non traditional lenders provide financing for those with irregular credit and income situations. You need to always show proof of a suitable income, but you don’t need to prove that you’ve been in the same job for many years or that your wage is deposited into your bank account.

Besides, the credit requirements are relaxed and anyone can get approved for a car loan as long as there are no mayor delinquencies in their recent credit history. Someone with bad credit, no credit at all or even a past bankruptcy on his credit report can obtain car loan financing through these non traditional lenders.

Where to Find Them?

The best way to obtain finance through a non traditional car loan lender is to seek lenders online. You can do a quick search for bad credit car loans online and you’ll find many online lenders willing to offer you finance regardless of your credit. You may have to face slightly higher rates but the monthly payments are always affordable enough so any budgets with a regular income can meet them without sacrifices.

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Unsecured loans can be very difficult to get. There are many factors a bank is going to consider that might make it impossible for you to achieve a positive response about unsecured loans.

Unsecured loans are loans for a business where the company doesn’t have to put up any collateral for the loan. These unsecured loans are common for very successful businesses that show a lot of revenue and assets. It is very difficult for most people who want an unsecured loan for a business to get a good response from a bank if they don’t meet many different stipulations of unsecured loans.

The unsecured loans stipulations usually required from a bank when you are asking for unsecured loans usually require good credit. You must have a high credit score for some of the unsecured loans. The company must have a proven track record of high revenues and success for the past year or two for some of the unsecured loans. The company must show more assets than liabilities and not be in the negative on the books in any way to receive most unsecured loans.

There are alternatives to unsecured loans if lenders are not seeing the big picture that you do. The best alternative to a lender giving you money is through a friend or a family member. If you have a friend or a family member who has the money to help you with the money you need then you won’t have to worry about getting turned away from the banks. A friend or family member also won’t charge you large interest rates like a bank will on unsecured loans.

Another alternative to unsecured loans is by finding government grants for your small business. There is millions of dollars that goes unclaimed every year and if you can get a grant you won’t even have to repay the money but show the government that you spent it on your business. This is an excellent idea for any type of small business because you don’t have to pay all grants back like unsecured loans. Grants are free money the government sets aside for small businesses as a way to stimulate the local economy. Most small business owners never consider business grants before they ask a lender for unsecured loans.

For more information about unsecured loans and how everyone can be approved please visit BusinessCashAdvances.com.

When faced with business finance funding decisions, it is essential for business owners to determine their practical and effective alternatives. In the face of recent volatile conditions impacting financial markets, this will not be an easy task. For example, there has been much misinformation and confusion about the true availability of commercial financing throughout the United States. Getting more accurate information about what is realistically possible can be one of the most difficult challenges for commercial borrowers.

Even for business owners who are satisfied with their current commercial finance funding arrangements, it is advisable to explore business financing options that might be necessary if economic conditions change further. The use of Plan B contingency financing is an important tool to assist commercial borrowers in this process.

There are a number of harsh realities which must be confronted by all commercial borrowers when assessing their realistic options in the current challenging commercial finance funding climate. There are several factors which will have an immediate impact on which financing alternatives can be considered. First, unsecured lines of credit are rapidly disappearing for many businesses because commercial lenders are eliminating or reducing this kind of working capital financing. Second, many regional banks have decided to stop or reduce their lending activities involving commercial mortgages and other commercial loans. Third, commercial construction financing is available on a very limited basis. Fourth, businesses which are not currently profitable or not current in their debt payments will encounter particular difficulties in seeking new funding. Fifth, many lenders are requiring more collateral for any new commercial loans.

The primary message of this article is to emphasize the importance for commercial borrowers of being more realistic when seeking new financing or refinancing. As noted above, there are some stark changes which now impact almost all new commercial loans. Despite these new and difficult challenges, most business owners will still be able to obtain new financing, although it is very likely that either the terms or kind of financing will be different from previous business financing arrangements.

For example, even though working capital loans are not as widely available as they were just a few months ago, this kind of commercial financing is still in fact obtainable. The main change for business borrowers is the likelihood that they will be dealing with a different commercial lender, since some of the largest providers have stopped making these loans. Furthermore, the lenders which are currently most willing to consider working capital funding are not aggressively promoting these particular financing activities.

Business cash advance programs which are based on credit card processing activity are another example of an increasingly practical commercial financing option in the midst of an uncertain economy. Although this business funding option has been available for several years, it has not been utilized by most small business owners. For most businesses which accept credit cards, business cash advances should be evaluated as an important tool for improving business cash flow. Commercial borrowers wanting to consider this financing alternative should consult with a commercial finance funding expert who is knowledgeable about both this specialized kind of working capital financing as well as commercial real estate loans and other commercial loans.

A lot of reasons exist why you should not only get into business, but also endure in business. You may want to take any of these decisions because of the love of a particular business, because of a need to do so, because you are bound to continue from where someone stopped or because you simply have a feeling to do so. In almost every country of the world, people are looking at the business sector as one of the bests. There are always statistics of these found in all countries. For example, the United States Department of Labor produces statistics which indicate that for almost the first three quarters of last year, unemployment was very high and a lot of people resorted to doing business.

There is no need to trouble yourself on the way your business is going to look like. All that is necessary for you to do is to develop a plan and seek for any of the so many options of securing finance for the business. The following lines are meant to encourage those coming into business and even those already in business to seek for means of financing their businesses:

Loans

This type of finance for a business is common all over the world and it can easily be gotten. In some cases, there is often a belief the loans can easily be gotten by everyone who applies for it. This may be true or false. It all depends on your business plan, the lending policy of the bank and the type and value of security you have. What makes this source of finance much considered is that interest rates on the loans are also reasonable. It should be warned that you should not get into taken of loans without seeking for proper recommendations from experts. Remember that it is always good to know the ins and outs of every type of loan ahead of getting into it.

Angel Financing

This is also another common source of finance that is common among new businesses and even those that are already in existence. What obtains here is that there are so many people who have the willingness and ability to pump finance into any business which have potentials to grow. Angel financing can be a family type. This will involve members of the same family pulling their resources together and investing it to develop a business plan. This is good but not preferable because of the close ties that the members may attach to each other, which may not be best for the health of a business. Angel financing can also be an affiliation angel. This will involve an association of friends willing to see a business plan from conception to completion. Another strand of angel financing is idea angel. These are financiers who are involved at the conception and actual progress of the business. Whatever the form of angel financing that you may opt for, you must get into the set of connections that these angels operate before you can benefit from financing.

Equity Financing

This involves raising money for the business by using what the business owns and can give out to the public. There are individuals willing to pay for equity in the business and even take part in the running of the business. Although this type of financing is common, it may not be available to every type of business. This is the more reason why every business owner must always carry out enough research in order to get the appropriate financing for his or her business.