The BCR Insolvency Blog

Why Accountants Should Refer Struggling Businesses To Licensed Insolvency Practitioners Right Away

Posted by Chris Knott on 02-Nov-2017 10:20:00

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Every day, accountants undertake a range of services for their clients, including budgeting, auditing, cost analysis and the preparation of financial statements. However, sometimes issues are identified with a business that go beyond the realms of day-to-day activity. 

For example, a client may come to an accountant with concerns for which they need advice, such as an increasing inability to pay bills, or issues with creditors. In some cases, issues can be resolved directly by the accountant. However, if this is not possible, the accountant should always refer the client to a licensed insolvency practitioner as quickly as they can.

Why Call An Insolvency Practitioner?

There are several reasons for an accountant to recommend calling an insolvency practitioner if their client expresses concerns. Doing so as soon as possible is not only good practice, but it also benefits the client. In many instances, waiting to contact an insolvency practitioner can only worsen the problem for the client.

Even though it is the client, and not the accountant, who is having the problem, an insolvency practitioner can still be of much assistance. In calling an insolvency practitioner, the accountant can get the support they need to give advice about their client’s situation. Doing so also allows the accountant to recommend solutions to the client in an objective manner, either on the advice of the insolvency practitioner, or via the client speaking directly to the insolvency practitioner.

Please note, although an accountant can contact an insolvency practitioner for informal advice, they must maintain client confidentiality. An accountant cannot divulge information about a client or act on their behalf with an insolvency practitioner without the client’s express written permission, although they can make recommendations.


Insolvency practitioners are experts in all manner of business financial matters. There is an overlap with accountancy – and indeed many insolvency practitioners are qualified accountants – but an insolvency practitioner will have specialist insolvency knowledge which an accountant may not have access to. They understand the importance of timeliness as well as the delivery of helpful and approved solutions. Not only do insolvency practitioners provide end-clients with the advice they require, they also provide accountants with the peace of mind of knowing their client is getting the specialist advice and support they need.

No Competition

Some accountants worry about referring a client to an insolvency practitioner because they fear the risk of losing business to a competitor. However, this fear is unfounded. Insolvency Practitioners do not offer any additional financial services which are typically offered by accountancy practices; instead they provide advice and support for business owners who find themselves struggling to keep their business afloat. They help clients turn their businesses around via a number of different options.

The Sooner, The Better

As stated previously, contacting an insolvency practitioner as soon as possible is the best way to ensure that a client gets the help they need. The first thing an insolvency practitioner will do is to complete an initial business review. This will help them to determine what options a business has, and which route is best advised. This first step will allow problems and their causes to be identified, enabling a plan of action to be formulated.

Once the business owner feels confident to move onto their next step, the insolvency practitioner helps the business owner execute their plan. This may involve changes to internal business procedures, the consideration of new markets or an increase in support to particular areas of the business.

In more serious cases, it may be that a payment plan may need to be arranged, or a process begun for the reduction of overheads or forgiveness of debt.

Providing The Best Level Of Support For Struggling Businesses

Some accountants are reluctant to refer a client to an insolvency practice as they risk losing a customer if the insolvency practitioner recommends liquidation! It is tempting to ‘see how things go’ and not refer the client too soon. This is understandable, but it is important to remember that an Insolvency Practitioner will not always recommend liquidation. There are often a range of refinancing and debt reduction options available.

The fact that a client comes to their accountant with a financial concern is a very positive sign that the client is willing to take steps to rectify the issue. This should be done quickly. Working together, an accountant and insolvency practitioner are in a very strong position to provide the best advice to struggling business owners and empower them to make the right decisions

Calling one of our insolvency practitioners as soon as possible for an informal chat will enable you to help your client get the process started. Call us today on 0333 014 3454.

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Topics: Insolvency Practitioner

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