Tips To Avoid Winding Up A Company In Financial Trouble
- By Derek Cooper
- Published Thursday 4th 2010
- Financial
- Unrated
Derek Cooper
If your business is in financial difficulty why not talk to us about possible solutions: http://coopermatthews.com/company-voluntary-arrangement.html http://coopermatthews.com/phoenixing.html Cooper Matthews specialise in helping small and medium sized businesses turnaround their financial troubles.
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If the current financial position of your business makes you believe that continuing to trade under the current circumstances is not viable, there are real steps you can take to save the company.
It is expected that when the figures are published for Q4 2009, the UK economy will be showing growth. For many business owners, the statistics will seem miles away from reality. On the ground conditions are still very difficult with closure a very real threat.
It is common for companies to have pruned staff and cut back on spending to survive. They have reduced the number of new orders that they place and are requesting large price cuts from the suppliers they are working with. To survive in this difficult climate, it is vital that business owners and managers keep a tight control over their companies.
Look for the following warning signs that your business is not in good shape:
Bank Overdraft always at the limit
Are you continuously using your bank overdraft. This could well be a sign that the business is not making money, and potentially is actually losing cash each month. You should consider areas where you can reduce cost and spending.
Be careful about relying on landing a new piece of business to turn things around. If so beware that in the current economic climate, potential clients will take much longer to make buying decisions and may require sign-off much higher up in their organisations than in the past. You should plan to wait much longer than you would normally for a buying decision and expect to have to reduce your price.
Late tax payments
If your business is not up to date with tax payments such as VAT and PAYE, this may be a sign that your business
is unable to pay its creditors and is already insolvent. See if you can improve your cash flow by taking advantage of the Government's "Time to Pay" scheme which was extended in the December Pre budget report.
If you are looking to borrow money to support current cash flow problems, you should consider your options if credit facilities are not made available. In the current conditions banks and building societies are being very reluctant to extend new credit.
If having reviewed the current financial position of your business, you believe that continuing to trade under the current circumstances is not viable, there are real steps you can take to save the company:
Company Voluntary Arrangement (CVA)
A company voluntary arrangement (CVA) may be used to reduce the business' debts. The company's creditors agree to reduced payments and to write off debts owed thus enabling the company to continue to trade.
Pre Pack Administration (or phoenixing)
The alternative to a company voluntary arrangement is pre-pack administration, also known as phoenixing. This process involves setting up a brand new company which buys the assets of the old and then continues to trade in its place.
The creditors are left behind in the old company meaning that the new business is given the best chance of success.
If your business has survived the difficult trading conditions of the last 18 months, it is now more important than ever to keep very tight control. Although the headlines may suggest otherwise, business at the grass roots level will continue to be difficult.
It is vital to identify potential problems quickly and act to resolve them. If you feel that implementing a formal solution such as phoenixing or a CVA may help, then take advice from a corporate insolvency expert. Delay could cost you your business.
It is expected that when the figures are published for Q4 2009, the UK economy will be showing growth. For many business owners, the statistics will seem miles away from reality. On the ground conditions are still very difficult with closure a very real threat.
It is common for companies to have pruned staff and cut back on spending to survive. They have reduced the number of new orders that they place and are requesting large price cuts from the suppliers they are working with. To survive in this difficult climate, it is vital that business owners and managers keep a tight control over their companies.
Look for the following warning signs that your business is not in good shape:
Bank Overdraft always at the limit
Are you continuously using your bank overdraft. This could well be a sign that the business is not making money, and potentially is actually losing cash each month. You should consider areas where you can reduce cost and spending.
Be careful about relying on landing a new piece of business to turn things around. If so beware that in the current economic climate, potential clients will take much longer to make buying decisions and may require sign-off much higher up in their organisations than in the past. You should plan to wait much longer than you would normally for a buying decision and expect to have to reduce your price.
Late tax payments
If your business is not up to date with tax payments such as VAT and PAYE, this may be a sign that your business
If you are looking to borrow money to support current cash flow problems, you should consider your options if credit facilities are not made available. In the current conditions banks and building societies are being very reluctant to extend new credit.
If having reviewed the current financial position of your business, you believe that continuing to trade under the current circumstances is not viable, there are real steps you can take to save the company:
Company Voluntary Arrangement (CVA)
A company voluntary arrangement (CVA) may be used to reduce the business' debts. The company's creditors agree to reduced payments and to write off debts owed thus enabling the company to continue to trade.
Pre Pack Administration (or phoenixing)
The alternative to a company voluntary arrangement is pre-pack administration, also known as phoenixing. This process involves setting up a brand new company which buys the assets of the old and then continues to trade in its place.
The creditors are left behind in the old company meaning that the new business is given the best chance of success.
If your business has survived the difficult trading conditions of the last 18 months, it is now more important than ever to keep very tight control. Although the headlines may suggest otherwise, business at the grass roots level will continue to be difficult.
It is vital to identify potential problems quickly and act to resolve them. If you feel that implementing a formal solution such as phoenixing or a CVA may help, then take advice from a corporate insolvency expert. Delay could cost you your business.
