Navigating Business Insolvency: When to Consult a Practitioner?

by insolvencyaustralia

No company would ever want to be insolvent. However, running a business might be a bewildering job. At times, the business strategies might not work out. So, when a company experiences financial complexities or foresees future issues, it’s not time to give up.

Remember, company insolvency does not mean the end of the business. Just following a few steps and hiring an insolvency practitioner would manage the issue. This post indicates the right time to consult a practitioner. Also, learn about the things to perform whilst your company experiences insolvency issues.

An Introduction to Insolvency for a Company

Insolvency is the financial scenario where the company fails to pay the liabilities and bills. The insolvency gets measured by the following aspects:

  • Balance sheet: The business’s assets get valued at less than the liabilities
  • Cash flow: The company fails to pay debts when and if due
  • Statutory demand: A company has received a written request or order for an unpaid sum after three weeks of being due

Did you know?

Insolvency is the company’s status of being unable to pay bills. However, bankruptcy is a legal term given to individuals or companies declared bankrupt by the court. So, it might be possible to be insolvent and not bankrupt officially.

What If Your Company Is Nearing The Point Of Insolvency?

What if your business struggles with massive amounts of debt and fails to pay taxes and rates? Or worse, what should you do if it experiences serious cash-flow issues? Saving your business from insolvency is a crucial endeavour. That’s where the role of a practitioner gets noticed.

Identify an adept insolvency practitioner who can assist you in determining viable options for accomplishing the most favourable outcomes. Besides, you can perform the following strategies to recover your business and rescue it from failing. Here are the given steps to bring your establishment back on its track.

#1 Explore Funding Choices

A few struggling businesses are in a position where they get underleveraged. That means there is adequate capital to establish its reputation. Having little debt isn’t that dangerous. However, in certain situations, it might also mean the business doesn’t have enough cash to pay employees, creditors, and suppliers.

That’s one situation when a business can think of borrowing cash from the bank. When you have significant debts, the best choice is to approach an alternative finance provider. 

#2 Improve the Cash Flow by Prioritising Your Business’s Loyal Customers

If the business struggles financially, it might be the right time to focus on profitable and reliable customers. That way, it can improve the cash flow. Also, it’s better not to increase the customer base during this time. This approach will offer a safer solution by reducing marketing and sales investment. At the same time, it improves cash flow and increases your earnings too.

#3 Offer Discounts to Customers Paying Invoices on Receipt

When your company experiences cash flow issues, you require money. If you want to accelerate the payment process, you can offer discounts for your customers. That way, they might feel like paying the invoices on receipt. Alternatively, some customers also pay in advance. 

A 10-15% discount on early payments will attract the maximum number of customers. But ensure that you calculate the discount before offering it. Your business should be able to afford it and not just offer great deals for the clients and customers.

Is it The Right Time to Consult an Insolvency Practitioner?

Even if you can implement the aforementioned strategies to manage insolvency, taking precautionary steps is better. Thus, hiring an insolvency practitioner sounds like a good move. The professional will advise you on the opportune time to minimise your company’s operation. That would work on your personal level and maximise funds’ availability for creditors.

With a licensed practitioner, your company can stay protected from claims of wrongful trading or even misfeasance. Thus, consulting an insolvency practitioner will demonstrate an establishment’s commitment to creditors. At the same time, it also minimises negative impacts.

How Can An Insolvency Practitioner Assist You?

The expert will communicate with you regarding your company’s financial position & viability to continue trading. They will talk about the following:

  • Financing
  • Business restructuring
  • Liquidation and more

Are you failing to manage debts or struggling with squeezed cash flow? Regardless of your insolvency problems and solutions, professionals at Insolvency Australia can assist you. If you want to collaborate with an insolvency specialist, book an appointment with the team. 

Insolvency Australia will offer a seamless way of identifying your professional who can determine viable solutions for achieving your business goals. From the list of competent insolvency specialists, you can select one as per their experience and skills. With them, your search for the right insolvency professional becomes seamless and simplified. Give the team a call today.

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