If you’re facing a cashflow crunch, whatever you do, do not put the situation to the back of your mind, or leave until next month because that major deal, order, or slug of finance is on its way. In our experience at least 40% of businesses go into insolvency needlessly and the key reason is down to putting off taking advice and leaving things too late.
You need a clear strategy to preserve the key profitable parts of the business.
You must be proactive not reactive. You must take charge of the situation with a clear plan that “passes the common sense test”. You or the team can then sell this to either key creditors, suppliers or financial institutions.
Top reasons why company directors leave things until it’s too late
- “We have looked at every facet of the business and no-one else could come in and improve the situation.” However, what might appear an impossible situation is an everyday issue with a solution to the experienced adviser.
- “We just need a couple more months.” Not taking the time now to look at the business is the number one killer, a seasoned professional will normally know in one or two days, the best way forward.
- “We do not have the funds to pay for this type of help, besides we know our business better than anyone else.” Let this be your advisor’s problem. If he cannot see a way of making funds available to pay his own fees, you are probably speaking to the wrong person.
What you should absolutely not do
Do not put any money, particularly personal, family or related party money into the business without taking advice first. This is crucial andproper planning can avoid serious preference issues.
What you should definitely be doing
If you have or can see serious cashflow issues, there are three types of people you can see for advice.
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Your accountant. But you must make sure this is their specialist area.
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A licensed insolvency practitioner. This could be a very good call, but you must remember he is duty bound to give best advice to all parties and not necessarily to the directors.
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A highly experienced independent firm. They will have the knowledge of dealing with hundreds of cases similar to your own and will have the right team to support them.
Good luck, but whatever you do, do something, protect your business income and future.
Ringrose & Co is an Independent firm with over 20 years experience, who have advised small, medium and national companies and never take upfront fees.
www.ringroseandco.co.uk Telephone: 0800 612 5364