With over 16,000 firms entering insolvency last year, business debt is a widespread issue in today's challenging economic environment. Whilst some sectors are seeing improvements in trading, others are still fighting their way through difficult terrain. Our guide gives you eight simple steps you can take to create a stronger trading and personal position.
1. Start The Ball Rolling
Creditors do not respond favourably to lack of contact and mounting bills - and tax arrears can never be ignored. Taking steps now paves the way to a more financially secure position>this applies even when you cannot meet the very bills it may be tempting to ignore.
2. Contact a Business Consultancy
The better consultants help with tax issues; audit and accounting; finance; human resources; business strengths and weaknesses; and identify new opportunities. Calm independent advice is essential, especially when dealing with more serious financial problems and any tax affairs.
3. Work on the basics
Compile a comprehensive list of who the business owes money to including the amounts and relevant dates. Together you can create a priority order focused on those attracting the most serious penalties. Creditors can be contacted and it may be possible to vary the terms in which they were due to be paid. If you don't already use one, your advisors can support you to create a balance sheet. A clearer understanding of income and revenue is vital when negotiating with creditors. Some may only be paid a token amount at this time, which still represents a stronger position than ignoring them.
4. Optimise your operations
There may be ways to reduce costs without harming the integrity of your product or service. It's also important to analyse existing trading for profitability as well as turnover. There may be products or services which perform better than others. Focusing on these and pricing can help streamline cash flow.
5. You may need further cost reductions
Should you need to further cut your overheads, discuss whether your current staffing arrangements are sustainable. Another area to consider is whether your current premises offer the best value for money for your needs.
6. Financing
You can also discuss whether a loan to consolidate debts could improve your financial situation.
7. Your Personal Drawings
It may also be worth discussing the level of salary or dividends you personally receive from the business. It may be possible to gain personal support such as Working Tax Credit, allowing you to temporarily draw less.
8. Accept professional support if turnaround is not possible
In the last few years a great number of firms have needed to move into formal solutions to debts. If turnaround is beyond reach, do gain support to move through a formal solution as smoothly as possible. Many directors are concerned by a sense of very personal involvement here, having worked extremely hard over time to try to resolve the problems. You should expect a respectful, businesslike approach from advisors that will support you on both a business and personal level. With professional input, you can calmly undertake all the necessary legal steps and move into a fresh new start.
1. Start The Ball Rolling
Creditors do not respond favourably to lack of contact and mounting bills - and tax arrears can never be ignored. Taking steps now paves the way to a more financially secure position>this applies even when you cannot meet the very bills it may be tempting to ignore.
2. Contact a Business Consultancy
The better consultants help with tax issues; audit and accounting; finance; human resources; business strengths and weaknesses; and identify new opportunities. Calm independent advice is essential, especially when dealing with more serious financial problems and any tax affairs.
3. Work on the basics
Compile a comprehensive list of who the business owes money to including the amounts and relevant dates. Together you can create a priority order focused on those attracting the most serious penalties. Creditors can be contacted and it may be possible to vary the terms in which they were due to be paid. If you don't already use one, your advisors can support you to create a balance sheet. A clearer understanding of income and revenue is vital when negotiating with creditors. Some may only be paid a token amount at this time, which still represents a stronger position than ignoring them.
4. Optimise your operations
There may be ways to reduce costs without harming the integrity of your product or service. It's also important to analyse existing trading for profitability as well as turnover. There may be products or services which perform better than others. Focusing on these and pricing can help streamline cash flow.
5. You may need further cost reductions
Should you need to further cut your overheads, discuss whether your current staffing arrangements are sustainable. Another area to consider is whether your current premises offer the best value for money for your needs.
6. Financing
You can also discuss whether a loan to consolidate debts could improve your financial situation.
7. Your Personal Drawings
It may also be worth discussing the level of salary or dividends you personally receive from the business. It may be possible to gain personal support such as Working Tax Credit, allowing you to temporarily draw less.
8. Accept professional support if turnaround is not possible
In the last few years a great number of firms have needed to move into formal solutions to debts. If turnaround is beyond reach, do gain support to move through a formal solution as smoothly as possible. Many directors are concerned by a sense of very personal involvement here, having worked extremely hard over time to try to resolve the problems. You should expect a respectful, businesslike approach from advisors that will support you on both a business and personal level. With professional input, you can calmly undertake all the necessary legal steps and move into a fresh new start.
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