Running a business is never smooth sailing, as clearly witnessed during the coronavirus pandemic which forced the introduction of unprecedented national trading restrictions that detrimentally affected company profits, obliterated income streams, and wiped out customer footfall.
As a business owner it’s natural to experience teething problems, such as cash flow shortfalls and supply chain delays; however, you should use this as a precursor to building a more resilient, cash-rich business.
It’s the legal duty of the company director to keep the business in robust financial shape, which entails keeping a sharp eye out for potential disruption that could threaten the viability of your business.
What are the warning signs of a failing business?
- Cash flow problems
- Creditor pressure
- Winding-up petition
- Overdraft limit reached
- Loan application rejected
- Poor credit history
- Late payment to suppliers
If your business is experiencing a cycle of financial distress, seek immediate advice from an insolvency expert to avoid accusations of wrongful trading.
What is wrongful trading?
If you continue trading knowing that your business is insolvent and cannot be rescued, you could be found guilty of wrongful trading. If wrongful trading occurs, you could be held personally liable for the debts of the company. If you believe that your business is insolvent, seek immediate professional advice to minimise risk to company stakeholders and yourself.
You must be prudent when operating a company in financial distress, as this could worsen the financial position of creditors and lead to the demise of your business.
Our experts are on hand and committed to providing sound and actionable advice to business owners on all corporate and personal insolvency matters. For immediate help and advice, contact us on our free confidential directors advice line on 0800 056 1536.
