John Cullen – Insolvency Partner
Dealing with financial distress can be very challenging. However, if early planning and advice is sought, the impact can be minimised. Below are six essential tips, should you find your business in trouble.
How to overcoming Financial Distress
Creditors will often have experience in dealing with customers in financial distress. If you cannot pay them on the due date, tell them so and what you intend to do to ensure that they get paid.
“If your business is struggling financially, doing nothing is not an option.”John Cullen
2. Stick to your promises
If you find that you have to talk to your creditors to extend payment terms, stick to the promises you make. This will build trust, meaning that if you ever have to have a similar conversation in the future, they will know that they can rely on you.
3. Cash is king
It is a cliché but it is true. If your business owes money to your creditors and cannot pay them on time, is it because your debtors are not paying you? Be active in chasing them. If they are in difficulty too, treat them as you would expect to be treated, firm but fair.
4. Management information is key
Did your management accounts predict this problem? If not, why not? Good management information can ensure you are prepared and have time to turn the business around. Time can often be the essential ingredient to success.
5. Seek advice and follow it
Your accountants or business advisers should be there to help you in both good and difficult times. Seek their advice and ensure you follow it. They should jump at the chance to add some value to your business.
6. Take action – doing nothing is not an option
Talk to a business recovery professional. Insolvency practitioners generally do not charge for initial advice and offer specialist assistance. They have experience of many similar situations and may be able to provide a solution that you have not thought of.