Common Indicators of an Insolvent Company

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There are ‘red-light’ signals that your business is in financial trouble, which if not addressed, may result in its failure. The specialists at The Insolvency Experts have highlighted some of the most common and frequent indicators that your business is struggling financially. If you are suffering from the pressures of insolvency, why not give us a call directly on 0300 303 8284?

1. You’re Not Able to Pay Your Creditors on Time and In Full

It is not uncommon for businesses to run into temporary financial difficulties, but the keyword is ‘temporary’ and when you are having ongoing and regular problems paying the company’s creditors on time and in full, it is an indicator that the company may be insolvent.  Your creditors will have their own debt collection processes but not paying them is not a problem that will go away.  If the situation gets serious enough, they may bring a winding-up petition against the company and subject it to compulsory liquidation in an attempt to receive the monies owed to them.

2. Creditors are Calling and Writing to Demand Payment for Outstanding Bills

If you are receiving written demands or telephone calls chasing overdue debts from creditors on a consistent basis, it’s likely that they will take further steps in the near future.  One of the options if they are owed more than £750, is to apply to the courts for a winding-up order to put the company into compulsory liquidation. It can be very stressful to be at the receiving end of these kinds of letters, phone calls and emails and the longer you leave it, the worse the situation will become.  There are several steps you may be able to take to deal with the situation, but ignoring it is not recommended. You can find out the best way to deal with creditor pressure online.

3. Creditors have Threatened or Taken Legal Action

If creditors are threatening or have taken legal action, the situation is very serious. They can take the company to court for the outstanding debt – of itself a public and unpleasant process that you will want to avoid.  Any creditor who is threatening to take legal action may also be considering issuing a winding-up petition against the company.

4. You’ve Received a Statutory Demand

A statutory demand is most-often the precursor to a creditor issuing a winding-up petition, so if a creditor issues the company with a statutory demand, they are almost certainly considering issuing a winding-up petition against the company.  If you’ve received a statutory demand, you have 18 days to either pay the debt or reach an agreement with the creditor as to how you are going to pay the debt.  If you don’t do one of these, then after the expiry of 18 days from the date of the Statutory Demand, the creditor will be able to issue a winding-up petition against the company (as long as they are owed more than £750, which is the minimum threshold required for a creditor to be able to bring a winding-up petition against the company). It should be noted that a company does not have to issue a Statutory Demand and can proceed to issue a Winding Up Petition if they can demonstrate they have issued previous demands for repayment of an overdue debt which have not been dealt with.

Is Your Company Having Financial Difficulties?

If your company is having serious financial difficulties, you should take steps as soon as possible as the results can be very serious if you do not. We provide company rescue and liquidation advice. You can call us directly on 0300 303 8284 or fill in the quick form to contact us online.