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Published: 1st January 2020
Poor cash flow can have a highly detrimental impact on a company. What may appear to be a temporary problem that is easily resolved, can quickly result in the company facing a winding up petition from a hostile creditor.
It is worth remembering that creditors can initiate winding up proceedings against a debtor company that owes £750, which is why seeking professional insolvency advice at an early stage is so important to business recovery.
Acknowledging that your company has a cash problem as soon as possible is crucial, so that early action can be taken using a number of potential options.
Begbies Traynor specialises in company rescue and recovery. We are the UK’s leading professional services consultancy, and can assist if your company is experiencing financial difficulty.
The first step in dealing with any cash flow issue is to put in place effective management information systems. This makes you aware of your company’s financial situation – an issue that is particularly relevant when insolvency is a threat.
If you carry on trading when you know, or should have known, that your company is insolvent, you could face disqualification as a director for up to 15 years. A simple cash flow forecast lets you know when working capital will be limited during the coming months, allowing you to prepare in advance for any shortfalls.
Essentially, you need to return to the basics of running your business when you are in financial distress. For example, consider whether there is there sufficient cash to meet your payroll obligations next month, or even this month’s electricity bill.
Essentially, you need to return to the basics of running your business when you are in financial distress. For example, consider whether there is there sufficient cash to meet your payroll obligations next month, or even this month’s electricity bill.
Professional insolvency advice must be obtained when your company has entered insolvency, but you may not realise that this type of guidance will benefit your business at any stage.
Temporary cash flow problems can often be solved with just a few changes to your systems and methods of operation. Changing the way you collect your own debts, for example, can bring in money throughout the month, and enable you to pay your own bills with more ease.
Alternative funding solutions such as asset-based loans or invoice finance can be of considerable assistance in returning your company to profitability. A cash lump sum, or regular injections of working capital throughout the month, offers greater financial stability and opportunity for longer-term growth.
When insolvency practitioners (IPs) are called in, their first aim will be business rescue. This can be effected via a number of formal insolvency procedures, including:
Treating cash flow problems as a crisis, however insignificant they may seem, can protect you from further issues and a potential decline into insolvency.
For more detailed cash flow advice tailored to your company, call one of our licensed insolvency practitioners. Begbies Traynor operates from 78 offices around the country, and can offer a free initial same-day consultation.
Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...Call our Confidential Advice Line. Calls to this number are free of charge.
Call us now...We invite you to come and discuss your enquiry with us at your convenience.
Request a meeting...