Businesses with mounting debts should keep communication lines open and look to do deals with creditors, business analysts advise.
According to turnaround specialists, LC Corporate Strategies, creditors are increasingly willing to negotiate with companies unable to pay rather than beginning legal proceedings.
Formal insolvency processes often leave creditors with little, therefore it is in their interests to seek alternative ways of paying, the company says.
“If a company is struggling to satisfy creditor payment pressures and service their funding commitments, it’s vital that they keep lines of communication with creditors and funders open and transparent,” says Stephen Fern, Director at LC Corporate Strategies.
It is also understood that there are many viable businesses which simply have cashflow problems at the moment and which could make survive provided they are afforded some time.
“Where a viable business exists, and a realistic and achievable future strategy requires the support of creditors through either a time to pay arrangement or a reduction in any outstanding debt due in full and final settlement of a liability, creditors are becoming increasingly responsive to such proposals.
“Behaving in a transparent, professional way with creditors; whether HM Revenue & Customs, a landlord or a critical supplier, is far more likely to result in a positive outcome for both parties.”
© Crimson Business Ltd. 2009