HOW TO DEAL WITH A CASHFLOW CRISIS by Natalie Hughes
Licensed insolvency practitioner, Simply Corporate
Cashflow problems can be a daunting experience.
You may be able to make a friendly arrangement with creditors, as keeping you in business helps them get what they’re owed. Otherwise, there are several formal solutions to get your business back on track:
Company Voluntary Arrangement (CVA) A CVA is an alternative to liquidating a limited company, allowing it to trade out of its financial difficulties by making a formal agreement with its creditors.
The arrangement is legally binding providing protection for the company and allowing it to repay a proportion of its debts over a period of one-to-five years.
Administration This provides a company with immediate legal protection from its creditors, whilst a rescue and recovery package can be formulated.
A Pre-Packaged Administration A ‘pre-pack’ sees a business’s assets sold to a third-party (sometimes the company’s own directors) prior to a formal administration process.
This preserves its value and maintains relationships with customers and employees.
Creditors’ Voluntary Liquidation (CVL)
If none of the above solutions are possible, then it may be advisable to close your company voluntarily, paving the way for a fresh start.
A CVL is a quick and cost-effective way of formally closing a company to comply with your duties as a director.
Acting quickly and seeking the help of a licensed insolvency practitioner will ensure you understand all your company’s options, providing you with the best chance to save your business.
BE DECISIVE WHEN BAD DEBT ESCALATES by Ian McCulloch
Partner, Opus Business Advisory Group Equity
Debt write offs are inevitable; credit management departments that say otherwise are hopelessly optimistic, especially in these incredibly uncertain economic times.
The trick is spotting the problem early and keeping the loss to an absolute minimum.
Signs of payment problems come in many forms, including delayed settlement of invoices, spurious disputes, requests for longer credit terms or round sum payments against the outstanding balance.
The first warning could be an unexpected rise in order levels. Perhaps other suppliers have put them on stop? Industry gossip is also always worth listening to.
If you use credit insurers, the biggest red flag of all is when they reduce cover on a customer or pull it altogether. They know your customer’s finances far better than you do.
The moment there’s any doubt, decisions must be made immediately. Do you cut the customer’s credit limit, change to cash up front or stop supplying altogether? The decision needs to be informed, based on all the information you have, the scale of the risk for your business and an adult conversation with the customer about their problems.
You must be decisive, no matter how good the customer relationship. What begins as a £500 dispute can so easily escalate into a £20,000 bad debt. Just remember, if your profit margin is 10 per cent, that write off means you need to do an extra £200,000 in sales elsewhere to repair the damage.
If your bad debt problems are escalating, it’s time to check your own business’s viability, or better still call in expert outside help to advise you on the way forward.
Group Services
Creditor Services
Corporate Finance
BUSINESS ADVISORY GROUP Solvent Restructuring
Business Finance
INSOLVENCY WE
Practical insolvency advice for directors & business owners
01282 222420
www.simplycorporate.co.uk
RESTRUCTURING & INSOLVENCY Forensic Accounting
Restructuring & Insolvency
Business Advisory
Working with businesses to manage the fi nancial impact of the cost of living crisis
In restructuring and insolvency, we know that it is key when advising a business, to look at all routes of action and explain viable options to the owners. Through our wider Group, we provide complete support options and have the resource and specialist knowledge to help companies and individuals deal with fi nancial and operational challenges as well as opportunities.
OPUS PRESTON - National support with a dedicated local team
preston@opusllp.com
01772 669 860
linkedin.com/company/opus-llp
twitter.com/opus_llp
www.opusllp.com
facebook.com/opusbusinessadvisorygroup
instagram.com/opusbusinessadvisory
Advert for Lancashire Business View
01-271023.indd 1
LANCASHIREBUSINES SV
IEW.CO.UK
27/10/2023 16:20
33
DEBT RECOVERY
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70
