Is my business insolvent?

February 24, 2020

With the economic pressures that have been faced by UK businesses, we are not short of news about businesses failing. Many companies are trying to avoid making redundancies, maintain and grow contracts whilst trying to manage costs. Over a period of time, the challenges grow, raising finance becomes problematic and then the question is asked – is my business insolvent?

It’s important when going through this challenging time, to make sure that you maintain up to date accounts, demonstrate that you are rigidly managing your cashflow and that you and all Directors in the business are discussing and monitoring the financial affairs at your Board meetings. Secondly, to start to gauge your company’s position, when reviewing the finances, identify the full amount you owe to creditors and review your assumptions that underpin your cash flow forecasts. This should not be more than the value of your company’s assets (including cash in the bank).

You’re not alone – typical business challenges

All too often, multiple indicators are showing themselves with overwhelming pressures (the management are in the thick of trying to resolve the day-to-day problems, not having time to address the wider issues). At the point we are contacted, companies are typically suffering with at least one of more of these problems, which have become critical:

  1. Battling to stay within an overdraft facility
  2. Arrears in HMRC payments
  3. Supplier issues affecting delivery of own products/services
  4. Staffing issues e.g. can’t find and/or retain employees
  5. Balance sheet and/or turnover reduction
  6. Client erosion
  7. Loss of turnover

You are not alone, but it is important to gain external support from experienced individuals who can support you through the next steps and take some of the pressure off.

When should I speak to an insolvency practitioner?

Many assume that an Insolvency Practitioner should be contacted at the point the company has run out of options and that an insolvency process seems inevitable; however this is not what we would recommend – it is far more beneficial for a business to contact us as early as possible.

When a business is struggling to raise the money in time to maintain trading operations, timescales are tight which limits the rescue options available. Often, when we are engaged earlier, there are likely to be more options to rescue and restructure a business rather than to implement an insolvency process.

This is where outside help can best support the management team. As well as recommending and implementing known and tried and tested methods to help the business, we have a number of contacts who can help a struggling business if a new viable plan can be identified.

We know that it can be a lonely place at the top, especially in a time like this. If you would like to speak to one of our Partners, contact us, or complete the form below, and we can confidentially discuss your business challenges in more detail and potential next steps.

Have questions?

For more information on business options, we offer an initial free consultation to review the situation and make recommendations on the best way forward.

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