“My company is deeply in debt and will most likely go out of business unless we take action quickly. The question is, “What can I do to get my finances back in order?”
When cash flow is tight, business is sluggish, and operational expenses are rising, it might feel like the world is collapsing around you. However, a last-minute shift is possible with a little willpower, focus, and investigation. If you follow these seven measures, you should be able to salvage what’s left of your company.
Take a closer look at the situation
First, you’ll want to meet with your firm’s managers and directors to discuss where your money is going, how much debt your company is carrying, and why your business is failing.
Look at business restructuring methods and strategies
Educate yourself on all facets of financial management, including budgeting and debt reduction. Make use of whatever technologies or methodology you have at your disposal to create a logical and mathematically sound strategy. Fortunately, if you’re reading this page, you’ve already taken the first step toward success.
The next step is to get rid of any unnecessary assets
Is there anything in your company’s possession that isn’t absolutely necessary for its continued existence, such as merchandise, tools, vehicles, or real estate? As quickly as possible, put them up for auction or openly promote them all. Part of a company’s assets might be sold to obtain cash for debt repayment or investments in the future.
Terminate any unnecessary contracts or relationships with suppliers and employees
This might be a huge drain on your resources if your staff or suppliers are being paid excessively each month. Rather than spending money on something you don’t need, save it instead and use it to pay down debt or make an investment.
Consider financing alternatives
Even if you have a bad credit history, you may be able to get a secured loan by using assets as leverage. Invoice discounting or factoring may be an option for you if your customers have a good track record of timely payment but you can’t afford to wait for them to do so.
Check out insolvency procedures formally
A formal insolvency procedure like an administration or a CVA may be the only option if you’ve tried everything else and still haven’t had success. During an administration, creditors are unable to take legal action against your firm, and an IP acts as administrator to help save it.
A CVA is a legally enforceable contract that would allow you to renegotiate the conditions of your debt repayment and maybe delete or amend the terms of your employee and supplier contracts.
Rebuild the company using some of its spare components
If everything else fails and it appears that creditors will take you to court and close your firm, the best alternative may be to launch an administration and arrange a pre-packaged administration sale.
Hopefully, this step will not be necessary for most of you. Some of the assets of your company might be purchased by your company’s directors in a pre-arranged sale using their own finances in a pre-packaged administration.
Once a Phoenix Firm has been established, the assets of the former company can be transferred to the new entity.
Not sure what to do?
If your company is struggling with unmanageable debts, poor cash flow, or an uncertain future, you are not alone. We speak to company directors struggling with the same issues as you every single day, and we are here to give you the help and guidance you need.
Call our team for free, no-obligation advice today on 0800 975 0380 or book a free consultation
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