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 things are a bit tight, it’s essential that you first assess where your company is and look at where you can trim back. Looking at your outgoings is the perfect place to start. A look at your balance sheet will give you the best idea of where your expenses are at and where there could be room to save money.
Marketing and sales are two areas that normally feel the crunch, but before you consider cutting areas of the business that will bring in new clients, try looking at your business processes. Is every area of the business as effective as it could be? Is your office too big? Are your employees trained to their maximum potential? Does everyone have the right kind of equipment to work efficiently? Although improving your business processes, you could be able to improve all of your departments and end up working better as a company. Any way you can cost cut is a plus.
Come to agreements with your creditors or get help for repaying debts
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.
To Summarise
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.
