THE liquidation of Carillion has left many suppliers and sub-contractors facing a difficult future.

Suppliers and sub-contractors have been seeking confirmation as to whether PWC, the Special Managers appointed, require them to continue supply for goods or services.

Affected businesses need to tread carefully here as ceasing supply without agreement could unwittingly lead to a breach of contract so taking advice is strongly recommended.

Suppliers will be highly unlikely to be paid sums due to them in relation to the period before the liquidation.

Businesses should also submit a claim to the Official Receiver for all unpaid bills but in all likelihood, many will simply have to assume that they won’t be paid for outstanding work.

As a result, many will suffer a painful hit to their cashflow.

There are encouraging signs from the Government and UK Finance that the banks will seek to support SMEs which need assistance with overdraft extensions, payment holidays and fee waivers.

Many businesses will also need to rapidly reduce their cost base.

Reducing headcount is one option but redundancy costs can sometimes exacerbate short term cashflow difficulties so are not always the answer.

In the short term, businesses should consider chasing outstanding trade debtors for payment and checking their own customer base for creditworthiness.

Graham Bushby, head of restructuring at Crawley-based RSM