Running a company is a lot of hard work and has many risks involved. Amongst these risks, insolvency is a situation that no business owner would ever want to deal with. Unfortunately, it is something that can happen to anyone and in the most unexpected way. Therefore, it is always better to be aware of the options you can explore to salvage your business before resorting to liquidation. Timely and appropriate action can save your company and even get you an opportunity to make a turnaround at the last moment. Even a struggling company with massive debts, creditor and tax burdens, and cash-flow issues can be rescued if you take the right approach towards handling an impending insolvency. Here are some steps that can help you save your business from being declared insolvent.
Concentrate your efforts on the best customers
When a business deals with multiple customers, they know that each of them is unique. While some are demanding and take a long time in clearing payments, others have a great relationship with the company and are always one step ahead with the payments. Concentrating on the best customers is the right thing to do when you are struggling to stay afloat. Make it a point to focus on the customers you consider reliable and profitable because they can contribute to improving your cash-flow. Rather than taking on any new customers, this is the time to maximize business with the existing ones. This will reduce your marketing and sales investment while increasing your earnings.
Explore your funding options
Customers keep your cash flow and working capital alive but you also need to consolidate your foundation for cutting down the insolvency risk. Insufficient capital at a stage when you are already struggling can be a killer. So you need to explore funding options, even if it means that you have to incur some debt burden. Having too little debt sounds great, but it is no use if you end up being insolvent. Look for bank loans or alternative funding to keep up with your taxes, supplier bills and employee salaries. Obviously, it makes a sensible idea to save your business from drowning when insolvency appears to be just around the corner.
Consult an insolvency practitioner
An insolvency practitioner can play a key role in saving a business that is facing an impending insolvency. They can act as a professional intermediary in the entire proceedings and even get you a turnaround option when there is no hope. You can check https://antonybatty.com/about-our-insolvency-practitioners/croydon-office/ to explore the services and solutions they can provide for businesses. While they do handle the legal aspects of insolvency and turnaround, dealing with insolvency professionals also brings greater confidence in your creditors and makes the path easier for your business.
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Call in outstanding debts
Businesses that are on the brink of insolvency obviously have a long list of creditors to pay off. At the same time, there may be some outstanding debts that you have to get from your debtors. One of the key causes of cash-flow issues is that companies allow outstanding debts to be unpaid for significant periods. If you fear losing out, now is the time to call back everything that is due to you. Get in touch with your debtors immediately and give them reminder notices. If they still do not pay back, consider recovery by using a debt collections company. Have a plan for the future as well, with strategies like offering early payment discounts for increasing the cash flow for the business.
Cut costs and repay creditors
Even the potentially profitable businesses may experience cash-flow problems and encounter insolvency apprehensions due to excessive spending. In fact, this is the main reason why things start going downhill for most of the organizations. The frivolous yet avoidable expenses relate to equipment, salaries, marketing or other operational costs. You can try different ways to curb expenses, from focusing only on core activities to making redundancies and cutting the marketing budget. Trim every spending that you possibly can. Also, use the saving smartly by paying out your dues to creditors and suppliers. While this approach will reduce debt and interest burden, it also lets your business regain trust and make a comeback as a viable company.
Though dealing with insolvency requires a great deal of courage and conviction, making a turnaround is still a possibility for a majority of businesses. Taking the right approach and collaborating with a seasoned professional can help you steer your organization in the right direction and bring it back on track subsequently.