You may feel that there is no way back once your business has hit the rails and you have had to file for insolvency. The number of businesses that are going to the wall every year is greater now than it has ever been proving that it is becoming increasingly difficult to own and operate a business in today’s economic climate.
Insolvency is a difficult process to go through. The inability to meet debt payments is no laughing matter. Insolvent companies are those that have been through the liquidation process, sold all of the company assets and have still not managed to pay off their debts. Once a company enters into the insolvency process, it is illegal for them to carry on trading.
Cash Flow Management
Effective cash flow management is the key to staying in business. But trying to manage that flow of cash when your business is in trouble is incredibly hard. In order to recover from insolvency you need to rethink the way that you manage your cash flow, and get a handle on debt management. Start implementing late payment penalties to your clients that default on their credit agreements and make sure that you have an effective credit control department in place that can chase up on bad debts and payment collection. Look at your commitments and prioritise them, make sure that you pay the most important things first such as employee wages; after all without your workers you have no business. Pay your suppliers next and then look to other creditor payments and tax commitments.
Think About Restructuring Your Business
Think positively about getting back on your feet after insolvency and start the ball rolling by restructuring your business. Change your business model, shuffle the management and change the way that you work. You will be able to start generating new streams of revenue and work better towards keeping the company financially in the black.
Try not to panic! There is no need to go into restructuring your business on your own. Instead, speak to someone who specialises in insolvency recovery, someone that has experience of turning a business around and getting it back on its feet again. Between you, you will be able to come up with a plan that will enable you to meet your operating targets and start generating some much needed profit for your organisation. They can not only help you with planning the restructure of your company, they can also work through the implementation of the plan with you.
Look to the Future
Insolvency does not necessarily lead automatically to bankruptcy. Many businesses are able to recover following a restructure and not only survive but also increase their profits and start to put money back into the company. If your company is facing insolvency don’t delay in seeking the help you need to get your business back onto its feet. Professional advisors can negotiate with your creditors, advise you on cash flow management and help you construct a business plan to see you into the future.
Laura writes for www.realbusinessrescue.co.uk, a company that specialises in business turnarounds and other issues relating to businesses going into administration and facing the insolvency process.