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Blog - Published 12th April 2019

Financial distress? Explore your options…

When creditors are increasing pressure and financial difficulties are threatening the survival of your business, insolvency may seem imminent. However, as this might be prevented, it is important that owner managers are aware of all available options before taking action.

Act fast! The possibility of protecting the business whilst also meeting creditor’s needs might still be on the table, but in order to keep your business turnaround options open and maximise recoveries for shareholders, seeking the advice of an insolvency expert is better done sooner than later.

As a business begins to have more difficulty in making payments and more time passes without resolution, the more options fall away. With creditors becoming impatient, the risk of them trying to recover their debts by issuing a winding-up petition to the Court increases. In this case, the liquidation process would commence and safeguarding the business and continuing to trade would become more difficult.


Help is on the way

Engaging an insolvency practitioner early on in a simple advisory capacity, rather than necessarily a formal appointment, is the best strategy for gaining the best outcome for a business. There are numerous options available, which include the likes of marketing the business for sale or overhauling work processes and accounting processes, all of which require a lead time. For this reason, when a business is in distress, time can be the most valuable currency and requesting professional guidance early will improve the chances of boosting your business’ financial position.

No two businesses are the same and therefore each insolvency situation requires a different approach and mixture of experts. When contracts need to be reviewed, a solicitor might be instructed and other situations may require an accountant for the provision of key financial figures. Analysing the types of professional advice needed at each stage of the process is recommended, especially when several different options, such as a company voluntary arrangement (CVA), refinancing or an administration could, still be viable.


The right mind-set

When times are tough, finding the right balance between a glass-half-full attitude and over optimism is essential to tackle your situation. A proactive approach will increase the Board’s chances of maximising value for creditors and getting the business back on track.

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