If you are experiencing financial trouble, it can be hard to know when to seek assistance from a professional insolvency practitioner. Many business owners get overwhelmed by the number of problems they face and forget that there are people out there who can take some weight off their shoulders during challenging financial times.
The sooner you seek assistance from a professional, the better chance you have of saving your company.
If you continue to operate even when your business becomes insolvent, you must understand that you are opening yourself up to numerous problems. If you fail to notify your creditors and other shareholders of your insolvency, you could be done for wrongful trading. Wrongful trading is operating your company when you know it is no longer profitable and insolvent. If your business is later liquidated and you were found to be trading while insolvent, you or other directors of your organisation could face a lot of complications.
Seek Professional Help Early
It is vital to seek professional help early if you notice your business is struggling to make payments or you’ve come across sudden cash flow problems. There are times when a company can lose a vital client that puts them into serious financial difficulty. You should look out for warning signs that your business is experiencing problems, the sooner you seek help the better for you and your shareholders.
Are you insolvent?
It is important to know when your company is insolvent to avoid any difficulties and address the situation as quickly as possible. If you are cash flow insolvent, you may be experiencing one or many of these issues:
- Inability to pay employees
- Failing to pay taxes on time or at all
- Unable to pay suppliers for goods or services
In addition to being cash flow insolvent, you can be balance sheet insolvent. This means that your total liabilities outweigh the worth of your assets. If you think your company is insolvent and you recognise some of these problems, it is important to cease trading immediately.
How Can an Insolvency Practitioner Help?
Initially, an insolvency practitioner will assess your business to see if there is any way they can save your company. They’ll evaluate your company by examining your financial situation and responsibilities, this helps them to determine your current state.
A professional insolvency expert will determine the most effective route to take, they’ll explain what options are on offer and how each one will affect your business. They may suggest a Company Voluntary Administration or CVA whereby you come to an arrangement with your creditors to make repayments over a specific period of time. The guidance of an experienced practitioner can be invaluable when facing financial turmoil and uncertainty.
If you don’t seek professional help and let your problems fester, you increase your chances of going into liquidation. If you owe a substantial amount of money, creditors can move to have your company immobilised, this can result in liquidation of your assets. If you are in need of corporate rescue, you should contact an insolvency expert immediately.
I set this blog up a couple of years ago now as a way to share my experience that I’ve gained through my school education and my real life education. It sounds geeky, but the economy is something that I’m really passionate about and it’s something that I am actually pretty talented in, so it’s great for me to share these experiences with those that may be struggling a little bit with finance and figuring out how to navigate the economy.