Is Your Business in Financial Trouble? How to Dig Your Way Out
Follow these simple steps to keep your company from going insolvent
Regardless of good intentions, passion and enthusiasm, certain businesses still seem to find themselves in financial trouble. These fiscal issues may have been the result of a flawed strategy, a faulty budget or a high employee turnover, but the results are still the same: A promising enterprise on the edge of ruin.
However, despite how bleak the outcome might seem at present, there are always strategies to navigate these challenges and avoid business insolvency. If your company is getting further and further into the red, follow the steps below and you can begin to rebuild your business.
Talk to your creditors and explain your situation
Transparency is the best way forward with your creditors. Meet with them and explain your current circumstances and financial situation. Your creditors want to get their money back so, more often than not, they will work with you to put together a repayment plan that better suits you. When you and your creditors have formulated a plan, ensure that you stick to the terms and conditions. It is essential that you fulfil your end of the bargain.
Speak to an Insolvency Practitioner
If discussions with creditors aren’t going well, you should find an Insolvency Practitioner and have them fight your corner. After all, an Insolvency Practitioner is a licensed, specialised accountant and debt management professional who is experienced in the fields of personal and business insolvency. They also have access to advanced insolvency software that is specially designed to take your current situation into account and create an appropriate repayment plan.
In business, the primary role of an Insolvency Practitioner is to do what they can to rescue a business from insolvency. They give their best advice, liaise with creditors and provide a legal understanding of options going forward. They can help with informal agreements, Company Voluntary Arrangements, and ultimately administration or liquidation, should efforts not be successful.
Reassess your current budget
If your company debt continues to rise ever-higher, you need to get back to basics and readdress your budget. Given your current situation, different factors need to be taken into account. Your debt repayments need to be considered, you need to cut costs and you need a firm plan of where you expect your company to be in the next five years. Remember that there are a lot of people depending on you to make the right decision, so get in touch with a professional accountant who will be able to point you in the right direction. With a little guidance, it is very possible that you can turn your company around.
Make repaying business debts your top priority
Unless you make debt repayments your primary concern, it is unlikely that you will have a business to operate in the future. Ensure that the debt with the highest interest rate is addressed first and foremost. Moving forward, be cautious with business loans; seriously consider whether or not they are worth the risk. Many businesses become insolvent due to hasty decisions regarding credit. Set a clear financial budget and make your business to stick to it.
Cut unnecessary business costs
Even if you think that your business is currently on the thrifty side, there are likely unnecessary business costs that you can stand to eliminate or cut back on. Taking care of the pennies today will greatly increase the odds of your company surviving tomorrow. Sell off any unused equipment; this will inevitably happen anyway, should your company go insolvent. An equally important factor to consider is customers who either refuse, or are unable to, pay on time. Chase up these clients or customers, as their transaction could make a huge difference to whether your business will thrive or spiral further into financial ruin.
Much like personal debt, corporate financial issues can be a serious source of stress and unease, especially if you haven’t got any professionals on hand to offer their expert advice and assistance. Regardless of your current circumstances, ensure that you contact an Insolvency Practitioner, who will take a great deal of the strain off your shoulders and help your company in whatever way they can.