Insolvency practitioners are thought to show up at the worst time in a business’s life; when it has become unable to pay its creditors. However, in reality, insolvency practitioners are responsible for saving many businesses.
Before Insolvency Occurs
Contrary to popular belief, an insolvency practitioner can be brought in to advise when a business is still healthy but the owner believes there could be a risk of insolvency. There are several warning signs that can indicate insolvency, signs that an insolvency expert can spot early and help you to rectify.
What are some of the common warning signs that can indicate insolvency? They can include:
- Issues with paying employees, contractors or suppliers (as and when they become due).
- The company’s liabilities outweigh the company’s assets.
- Extending your creditors’ agreed credit terms for payment e.g. paying creditors later than agreed.
- Tax payment problems which may or may not have resulted in HMRC warnings.
- The company being threatened, or receiving, a winding-up petition.
- Problems with customers defaulting on invoices or being behind on payments.
These signs are all easily identified by an insolvency practitioner, who can advise you on how to reduce your insolvency risk.
An insolvency practitioner can help to save your business by drafting a company voluntary arrangement (CVA). The CVA proposal is issued to your creditors for their agreement/rejection. The purpose of a CVA is to relieve creditor pressure whilst creating a manageable payment schedule. This option allows your business to continue trading (under the directors’ control) whilst the company repays its debts.
Administration is another way that an insolvency practitioner can help to save your business. The primary goal of this process is to save the company as a going concern.
This process can be followed by a CVA, and can also be used as a tool for better business management and continued trading. Jobs and economic activity can be saved by selling the company via an administration sale. When an administrator is appointed, they become responsible for trading the business on a day-to-day basis.
A large part of an insolvency practitioner’s job involves providing general business advice or imparting specific knowledge prior to insolvency. The expert advice provided by BCR has helped to save many businesses. Insolvency advice, when properly taken on board, can help businesses continue their operations and avoid a formal insolvency procedure.
When looking to save your business, the best way to regain control of your company finances is to choose a reliable insolvency practitioner with a track record of success. With a proven case history of business recovery, BCR have the skills and experience to help you achieve the best outcome for your business. To find out more about the ways we can help, please get in touch for an informal and confidential chat.