Businesses have been told to seek advice from an insolvency professional as soon as they show signs of financial difficulty.

The North West branch of R3, the insolvency and restructuring trade association, also said firms should form an emergency response committee and review their employees' contracts in response to the coronavirus pandemic.

Branch chair Allan Cadman said firms should seek advice from an insolvency practitioner or restructuring professional at the first sign they may be running out of money.

Allan said: “Early advice and early discussions with creditors give you a greater range of options to find solutions to the challenges you face and enable you to make a considered decision, rather than a rushed one.

"Good advice also protects you from personal liability if the business fails.”

It was also important for businesses to have a group of senior staff to decide how to respond to the crisis, as well as the ability to bring all staff together when necessary.

"An emergency response committee gives you access to all the areas of expertise in your business and enables you to get them together when you need them,” he said.

Staff contracts may also have to be changed to reflect any new duties, changed work schedules, or reduced benefits.

“If you’ve changed the way you do business, make sure your employees’ contracts reflect this, and that any changes have been discussed with them before they’re introduced," he said.

At the same time, it was essential to keep control of cashflow and negotiate with suppliers and creditors to defer payments and keep cash in the business.

It was also vital to check the terms of any insurance and what it would cover.

"Check what yours covers and, if you can, have a conversation with your brokers or insurers on any points you need to clarify," said Allan.

Firms should also keep communicating with both those inside and outside the business, he said.

"Keep the channels of communication open between everyone and make sure staff know they can ask you for help if they need to."