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Is forbearance the key to small business resilience?

29 July 2020 Small Business Advice

An interesting aspect of the COVID crisis is the way different words have crept into our vocabulary to describe its impact. These words reflect the different thinking we need in order to negotiate these difficult times.

‘Furlough’ was one of the first of these words. It sounds like a farming procedure, but is actually derived from the Dutch ‘verlof’ or ‘leave of absence’ (as millions of UK employees have since discovered).

Another example is ‘forbearance.’ Again, it has a certain ‘olde worlde’ ring to it, but the idea it represents is about as 2020 as it gets.

What is forbearance?

In a broad sense, it’s about ‘demonstrating patient self-control, restraint or tolerance.’ However, there is also a narrower legal definition: ‘to refrain from exercising a legal right to enforce payment of a debt.’ 

Self-styled ‘Money Saving Expert,’ Martin Lewis is a passionate advocate of the idea. He built a career around urging customers to cut costs and ruthlessly pursue their rights, but for the pandemic he changed tack

Now he says“Be patient with companies that are trying to get their staff settled to new ways of working and rewriting years-old policies in a day. If you can afford to, consider accepting vouchers instead of a monetary refund.”

That’s quite an about-turn for a consumer champion. He’s saying we must ‘forbear’ with the many good companies caught up in this bad situation. 

And this forbearance is even more relevant for those who run or work with small businesses. Let’s take a look at how the idea can be applied. 

Forbearance with customers

As your company adjusts to life post-lockdown, you’ll want to bring the cash in any way you can. But ruthlessly pursuing creditors may not be the best approach right now – and could even damage the fragile economic ecosystem that many companies operate within. 

There’s no hard and fast rule here, but sometimes business is about more than the bottom line. If a good customer is struggling, perhaps you can come to an agreement. It could be a discount, a deferral, or new payment terms.

Be imaginative, but make sure too that whatever deal you strike is one that both parties are comfortable with. 

Forbearance with suppliers

If a normally rock-solid supplier suddenly becomes shaky and unreliable, there’s no need to wonder why. This crisis has seized up the entire engine of UK business – and it may not be running freely any time soon.

Somehow, the entire business community must act together to work out its financial difficulties. Small businesses are really hurting, but big businesses have been affected too. And the economy is about all of us. 

So, get on the phone. Find out what’s happening and figure out if there’s any way you can help. Perhaps you have expertise that can solve their problem – or know someone who has it. You’ll never find out if you don’t call.

Forbearance with employees

For those who contract severe symptoms, and their families, Coronavirus brings unimaginable suffering. Showing compassion to affected employees is not even about forbearance; it’s human empathy.

But this crisis is about more than the virus; its effects have rippled out to all different corners of society and changed how many of us feel about our lives. Some of your most valuable people may be a bit overwhelmed, so you need to show understanding. 

Keep the communication lines open. Tell them they can call you at any time – and mean it. And when they do call, listen. You may be one of the few people who do. And that could make all the difference.

If we want forbearance, we must practise forbearance

Not many people predicted that a virus in a faraway land, unknown prior to last November, would stop our economy in its tracks. So, let’s be less judgemental and more understanding of those whose affairs have been devastated by this once-in-a-century crisis.

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