Many company directors have entered 2023 filled with a sense of trepidation, as an uncertain economic and trading landscape is made all the worse for the huge number carrying the additional burden of debt in the form of CBILS or Bounce Back Loans.
While the challenges facing businesses are undoubtedly daunting, there are steps you can take to put your business in the best position possible to weather the storm.
- Take stock of the situation – A cash flow summary will establish how much money is leaving and entering the business. Being brutally honest about the short-term outlook for the company could mean admitting the business may be in difficulty – while this is a tough thing to do, it is actually the best starting point for turning the situation around.
- Talk to creditors – Even those companies who have not been impacted will be well aware of the struggles others are facing, and would much rather know the businesses position rather than having requests for payment ignored. Keeping a line of dialogue open with creditors can be useful in helping to smooth negotiations in future.
- Talk to debtors – It is necessary to keep a close eye on money coming in. If you have customers who owe your money, you need to ensure your collection processes are as robust as they can be. You should remain in contact with debtors and chase for payment where appropriate.
- Streamline the company – Undergoing a streamlining process can help to cut waste and boost your cash flow. Taking a strategic look at a company’s operations will highlight any underperforming areas which may be having a detrimental effect on the business.
- Keep staff updated – As much as directors may want to hide the company’s problems from their employees, it is highly likely that staff will be aware that the business is facing challenges. Ensure that paying wages is prioritised and keep staff updated if any changes occur.
- Assess any outstanding finance – You should look at the level of current loan repayments and make a note of when fixed loan repayments come to an end. A consolidation of loans may be appropriate, or shopping around for cheaper finance options.
In conclusion, don’t ignore problems. When it comes to company distress the sooner action is taken, the more options will be available to provide help. There is a range of business rescue and recovery options which can be used to turn a company’s fortunes around. This may include a process of financial and operational restructuring, entering into negotiations with creditors, or getting some breathing space if legal action is on the horizon.
A licensed insolvency practitioner will be able to assess your current position, and work alongside you to put a plan in place to resolve the problems of the company. For immediate help and advice, contact us on our free confidential directors advice line on 0800 056 1536.
