Warning signs that your company could soon be insolvent and what to do

Insolvency

If your business is in debt and you believe it may be insolvent or approaching insolvency, there is no time to lose. Jason Elliott at The Insolvency Experts explains why it is essential to consult with a licensed insolvency practitioner as soon as you recognise a potential problem and highlights some of the warning signs which you should look out for in determining whether or not it is time to call for help and get some Insolvency advice in Manchester. Being declared insolvent is a serious matter and it is important that you act on it as soon as you see the warning signs or the repercussions could be fatal for the Company.

Cash flow

A general misconception is that it is a solvent Balance Sheet or profits that dictate the success or failure of a Company. Whilst both of these are individually important it is invariably cash flow issues that are probably the biggest warning sign that you could be heading toward insolvency. Things to look for may include problems ordering stock due to overdue debts, refusal of new credit, threatened legal action, creditors harassing you on a daily basis, refusal by creditors to extend payment terms These are all signs which should alert you to the fact that your business is in financial distress. Whilst your company may not yet be insolvent, there is every indication that it soon could be if you don’t take action immediately.

HMRC

If you are you are late in reporting to or paying HMRC they can act quickly when there is any question as to whether or not a company is insolvent. This in turn can open up a whole new can of worms. Rather than be petitioned or penalised by HMRC, it is better to take a look at your payment history and whether you have reported as you should. PAYE not paid by the 19^th of the following month can quickly bring the bailiffs to your door.

Debtors

Are you struggling to meet your liabilities because your company is not being paid on time. If your debtors are not making payments as they should, this will have a negative impact on your cash flow. This then has a domino effect because you aren’t being paid, your creditors will not be paid. If you have used a factoring company and are not receiving funds as you had anticipated, it signals that either your customers are not paying them or they simply are not paying you as arranged. In either case, The Insolvency Experts can assist you evaluate what is going on and we can offer advice and a viable solution.

Business management

Perhaps the business is not being effectively managed and one owner or director is carrying the brunt of the burden. This is a sign that things are not running smoothly which can lead to uncertainty in all aspects of the company, especially finances. Companies heading towards insolvency tend to have problems with inaccurate or inadequate management information, directors and or managers unable to make decisions and solve problems and failure to complete work on time. If any or all of these issues are identifiable in your company, there a possibility your business is insolvent or is heading that way and you should contact an insolvency practitioner such as The Insolvency Experts for advice on your business plan. The Insolvency Experts are experienced in helping turn around financially distressed businesses. Sometimes it is only a matter of improving cash flow, cleaning up management issues or re-financing for example. Other times more drastic action may be necessary. The point is, if you identify any of the warning signs of insolvency in your business, it is important to seek advice as quickly as possible. There are a number of solutions which can help put your business on the road to recovery and our team at The Insolvency Experts can analyse your business and give advice as to your options. If you recognise any of the warning signs of insolvency, contact Jason Elliott who’s part of our Insolvency advice service in Manchester for confidential, honest advice.