Most businesses experience cash flow problems at some stage. Ben Cowgill at The Insolvency Experts looks at why these can occur, the possible implications and outcomes and options for recovery. In simplistic terms cash flow problems arise when current liabilities outweigh current assets i.e. you have to pay more out than you have coming in. A firm is insolvent when it becomes unable to meet its debts as and when they fall due which is by its very definition dependent upon ‘cash flow’. Business cash flow problems can lead to a number of other issues which can result in formal insolvency proceedings unless you seek help from professional insolvency specialists at the earliest opportunity. As a director whose business is in financial distress it’s essential you be honest with yourself and your advisors – don’t bury your head in the sand. The cash flow issue may be just a temporary one which can easily be resolved, or maybe you’ve been in denial for some time and there are serious underlying issues which will require radical steps to rescue the business. Once a company begins experiencing cash flow problems the biggest worry for directors is being faced with a winding up petition by creditors in the event of which your company could potentially be a matter of days away from liquidation. Our team at Insolvency Expert can help to quickly identify where your difficulties lie in order to begin turning around your distressed business. We often find that the issues underlying a cash flow problem are the result of several factors. For example, uncollected overdue invoices, insufficient sales, excessive costs, a poor business model, even ineffective management. We can undertake a careful analysis of your business to determine if there is a viable route to recovery. Whilst there are many ways in which a business can deal with a cash flow problem, the first thing to keep in mind is that cash flow problems are probably an indicator that your business is insolvent at the moment and you should seek the advice of an insolvency specialist immediately to establish how you can make funds available to get up to date with your creditors. If your company is insolvent with no consideration being given as to how bills will be paid in the future you are could be heading for real problems.

What are your options?

Whether we need to help restructure your business, help you obtain financing or set up a Company Voluntary Arrangement with creditors, there will be an answer to your financial worries. Sometimes these matters can be cleared up quite quickly. When advising how to avoid cash flow problems and the consequences of having no working capital, we can suggest invoice factoring if you have a surplus of uncollected debts from your customers. On the other hand, if your company has outmoded products or ineffective management, we may suggest Administration and restructuring to keep the creditors at bay. Our ultimate goal here at Insolvency Experts is to find a means to help your company survive financial distress. Cash flow problems don’t need to signal the end of the road for your company. For this reason, contact us immediately you recognise cash flow is a problem. It is our job to keep you out of the courts and in business.

Contact us

Ben Cowgill who’s part of our Insolvency advice service in Manchester will provide confidential, honest advice. He can be contacted on 0300 303 8284 or by clicking here.