Business Advice Services News

When things are not going well with your business, as is the case with a lot of businesses at the moment, it is difficult to see the wood from the trees.  It is therefore important to recognise the warning signs and seek advice early.  Most Business Recovery specialists or Insolvency Practitioners (IPs) offer a free “Business Health Check” or initial consultation.

Although a number of the banks offer similar services, there is always the danger that if your business is showing any signs of being in difficulty, they will look at you as a potential failure and take steps to protect themselves, often to the detriment of your company.

On the other hand, when you call in a Business Recovery specialist or Insolvency Practitioner, they will be on your side and fight your corner with a view to saving your business, possibly through a Company Voluntary Arrangement (CVA). Be aware, that to continue trading when a business is insolvent is a criminal offence and can result in the directors being banned from being directors of a limited company at best and prison at worst.

Fightyourcorner’s Business Recovery/Liquidation specialist in the Midlands, John Warburton of BRIUK recently said: “The majority of businesses will be affected by the credit crunch and/or the increase in fuel costs and there are no signs of either easing off in the near future. I would strongly recommend that those businesses affected keep a close eye on their finances and at the first sign of cashflow problems, they should seek professional advice.”

Clearly, it is important to take advice sooner rather than later if there is some doubt about the viability of your business.  This will be evident through continued difficulties in paying your bills, hereditary debt, difficulty in keeping within your overdraft or other financial facilities, debt recovery problems, a fire at your premises, serious labour relation problems or any other circumstances which are detrimental to the financial well being of your business.

A number of options could be explored to restructure or rescue your business including:-

•    Negotiating alternative payment terms with suppliers and creditors

•    Negotiating planned stage payment terms with HMRC

•    Renegotiating overdraft or other financial  facilities

•    Renegotiating rent of premises

•    Installing an effective debt recovery programme

•    Ensuring an efficient prompt invoicing procedure is in place

•    Carrying out an overview of overheads including premises, staff, expenses, etc

•    Looking at the existing market relative to competition, demand, price, outside influences

All of this is a positive approach to enable the restructure of your business into a sustainable entity, keeping your business alive and providing you with an income which would not be available if the business were closed down.

Fightyourcorner’s Business Recovery/Liquidation specialist in the South of England, Alan Simon, Licensed Insolvency Practitioner with Langley Group LLP says: “We are expecting extremely difficult times ahead for nearly all sectors, particularly retail and property. My recommendation would be to seek advice sooner rather than later, to save your business and avoid personal liability”

If the situation is more serious, there are other procedures which can be entered into:-

Company Voluntary Arrangement (CVA).

Simply, a CVA is an agreement between a company and its shareholders and creditors which “ring fences” the debt, allows the company to continue trading, leaves the directors in control, and offers a proportion of future profits back to the creditors in full or part satisfaction of the debt. The proposal requires the agreement of 75% of the creditors who actually vote, although all creditors are bound by its acceptance. HM Revenue & Customs are likely, in most cases, to support a viable CVA.

Administration

Sometimes, when a company is under extreme pressure, for example subject to a winding up petition or bailiffs action, it may be necessary to obtain immediate protection for the company. The prime objective of an Administration is to rescue the company as a going concern possibly through a CVA. If this cannot be achieved the Administration should secondly result in a better realisation for the creditors as a whole, possibly through the sale of the business or its assets.

Company Liquidation

In many cases it is better advice for a company to proceed into Creditors Voluntary Liquidation. This will not affect a director personally (unless he has previously been disqualified as a director) and there is no reason why he or she cannot form another limited company and buy back the assets, goodwill and customer list. The director will have no personal liability other than in relation to debts that have been personally guaranteed.

The Insolvency Practitioner you instruct will act as the Voluntary Liquidator.

A creditor may take action to wind your company up by presenting a petition for the compulsory winding up of the company. In that case, the Liquidator of the company will be the Official Receiver or possibly an Insolvency Practitioner he appoints.

Fightyourcorner’s recommended Business Recovery/Liquidation specialist in London, Nicole Southwell at BRS Associates says: “We at BRS encourage the management and/or owners of a business to speak to us as soon as the first signs of difficulty appear. It is our experience, when advice is sought at the early stages, that it is likely a business can be saved from entering into a formal insolvency procedure if there is a genuine profitable core to the business.”

Whatever the situation a Business Health Check sooner rather than later is strongly recommended. To discuss a business health check, call 0800 130 0473 or email: mailbox@fightyourcorner.com