5 Ways to Rescue your Business from the Brink of Insolvency
If your business is nearing the point of company insolvency, it’s essential you take immediate steps to recover your position and save your business.
At Company Debt, we specialise in advising on business turnaround and have assisted hundreds of businesses with significant financial difficulties, helping to save jobs and pay creditors in the process.
Having worked with you to understand your situation we will always give you the best available options. If your financial solvency is in real doubt, our experienced Insolvency Practitioner team can guide you through the options on administration, voluntary arrangements or liquidation, your position and what to do and what not to do.
So, if your business is struggling with large amounts of debt, can’t pay business rates or taxes, or has serious cash-flow issues, there is still hope. By using one of the following 5 strategies, you could recover the business, save it from failing, and continue trading.
Don’t forget, we offer a free confidential directors help line to talk through any serious debt situation. Speak with one of our team right now or, if it’s after hours, leave us a message and we’ll call you back.
How to save a business from Insolvency
How do you resolve potential Insolvency?
Unfortunately, insolvency is rarely something which be simply fixed: it’s the end result of a series of conditions that have weakened a company to the point where it’s on the verge of bankruptcy.
That said, the situation is not always insoluble. With the right understanding and as series of decisive actions many struggling businesses can be restored to profitability and even go onto become hugely successful.
What’s important, however, is that you look carefully at the situation you’re in and understand how’s it happened so you can resolve financial problems.
The following steps may help as you try to bring the company back on track.
1. Concentrate Your Efforts on the Business’s Best Customers
Anyone who runs their own business will know that no two customers are the same. There are customers who are incredibly demanding and eat up your time, only to then make payments long after they were due. Then there are those dream customers who leave you to get on with your work and always pay their invoices on time.
If your business is struggling financially then focusing on your most reliable, profitable customers can be an effective method of improving your cash-flow. It can also be beneficial not to take on any new customers, and instead focus on increasing the work you do with existing clients. This approach provides a solution help to reduce your sales and marketing investment, while improving cash-flow and increasing your earnings.
2. Explore Your Funding Options
Some struggling businesses are actually in a position where they are ‘underleveraged’, which means there is insufficient capital to grow the business. Having too little debt sounds like a good thing, but it could be the case that there is not enough cash to pay suppliers, employees and other creditors.
If your business is struggling but currently only has a very small amount of debt, borrowing cash from a bank could help you out of a sticky situation. If you already have significant debts, approaching an alternative finance provider could be your best option.
3. Call in Outstanding Debts
It’s commonly the case that companies allow outstanding debts to go unpaid for significant periods of time, potentially resulting in cash-flow problems. A growth in accounts receivable is a common cause of company insolvency issues. The longer you give a company to pay its debts, the greater the risk it will be compulsory liquidated by another creditor or close itself with a creditor voluntary liquidation.
One way to deal with late commercial payments is to contact your debtors with a reminder notice. If they still fail to pay, consider using a debt collections company to recover the debt. In future, you could offer early payment discounts to increase the flow of cash into the company.
4. Cut Costs and Repay Creditors
If your business is experiencing cash-flow issues and potentially failing, then you need money, fast. Most businesses offer payment terms of at least 30 days, and sometimes up to as much as 90 days. If you’re concerned about the speed of payments, offering exclusive discounts for customers who pay your invoices on receipt, or even in advance of the work being complete, can be an effective solution.
Offering a 10 or 20 percent discount for early payment will be an attractive proposition for the majority of your customers. This discount should be calculated to make sure it’s an offer you can afford, and not just a great deal for your customers and clients.
5. Offer Discounted Prices in Return for Immediate Payment
If your business is experiencing cash-flow issues then you need money, fast. Most businesses offer payment terms of at least 30 days, and sometimes up to as much as 90 days. If you’re concerned about the speed of payments, offering exclusive discounts for customers who pay your invoices on receipt, or even in advance of the work being complete, can be an effective solution.
Offering a 10 or 20 percent discount for early payment will be an attractive proposition for the majority of your customers. This discount should be calculated to make sure it’s an offer you can afford, and not just a great deal for your customers and clients.
How can we help?
At Company Debt, we work with businesses that are battling against a negative cash-flow position and unable to make ends meet. We help owners explore alternative funding options such as invoice discounting and cost cutting measures that could keep viable businesses afloat. Please get in touch for the expert, no-obligation assistance you need to resolve this situation. Call 0800 074 6757, or email info@companydebt.com; Alternatively get immediate live support on the lower right hand side.
