With the global pandemic causing trouble across the global economy, times are tougher than they have ever been. Even with the best possible financial planning, you can still get into trouble and find yourself and down the slippery slope into insolvency. In these unstable times, what can directors do to if their company finds themselves in financial trouble.
Review your outgoing expenditure?
When confronting financial constraints, it’s crucial to initially assess your company’s current state and pinpoint areas for potential cost-cutting. A thorough examination of your outflows serves as an excellent starting point. Reviewing your balance sheet offers a clear overview of your expenses and highlights potential areas for savings. Furthermore, if you find that your current financial model and budgeting sheet are not effectively optimized, consider reworking it. If you don’t have the expertise or time, you can look for Financial models and budget templates available online that are ready to use. These templates aid in identifying gaps in your financial planning, streamlining your budgeting process, and enhancing overall financial efficiency.
Marketing and sales departments are often the first to feel the pinch, but before considering cuts that may affect client acquisition, evaluate your business processes. Are all aspects of your business operating at peak efficiency? Is your office space proportionate to your needs? Are your employees trained to their fullest potential? Do they have the right tools to work efficiently? By enhancing your business processes, you can potentially optimize all departments and enhance overall company performance.
If you lack the expertise or a concrete plan for cost-cutting, consider engaging a specialist in corporate finance cambridge or wherever your company is located. These experts can assist in assessing your current financial situation and devising strategies to reduce expenses. They can also offer guidance on investments and methods to enhance your business’s profitability.
Come to agreements with your creditors or get help for repaying debts
Any time your business is struggling and there’s a need to take some leaps to save your company, the first thing you should do is talk to a Business Broker and assess your company’s value. In times of financial difficulty, you would have to look for solutions that can bring in the most amount of money. In this situation, you may even have to consider selling some or all of your less profitable operations. Your broker can help you get the best price in this situation, and can also handle negotiations with potential buyers and take care of the paperwork.
Like the majority of company’s throughout the year, most will have debts. Whether that’s through paying your debtors late, struggling with an unexpected cost or tax bills, at some point, every business will have outstanding debts. Failing to pay these debts can leave you with lots of creditor pressure, which if unhandled can leave to creditors trying to close your company down.
When you’re first facing these kinds of difficulties and you genuinely believe that the company can trade its way out of trouble, it’s important that you talk to your creditors. If you have outgoing debts with suppliers that you’re struggling to pay, talk to them and explain your situation, tell them that you need more time and the money will be on the way.
If the debts do become too much for your company to handle, thankfully there are still some ways of dealing with the debts. Try looking at getting an influx of cash through various means of commercial finance, but if that’s available and you don’t feel like taking on additional credit, there are various formal repayment plans available you may be able to arrange.
Look at protection of creditors through insolvency options
As the threat of legal action grows from your creditors, it gets harder and harder to pull yourself out of trouble. Although Creditors Voluntary Liquidation will see the closure of the company, if you look into options such as Administration, if the company is still viable, it can see your business temporarily protected from creditor action.
As mentioned above there are also repayment plans available, if your creditors can agree to them. A Creditors Voluntary Arrangement is a legal repayment plan, which you agree with your creditors and allows you to pay them back in monthly affordable payments.
During these troubling times, ignoring problems can lead to serious repercussions and creditors forcing legal action on you. Looking through your outgoings, is a good place to start, as well as assessing the quality of your business processes and seeing if your company is working efficiently. Alternatively, you go down the route of finding additional finance through various forms of commercial finance. Finally if none of these are option, then look towards formal legal proceedings as a way of repaying creditors back and saving the company.