Sometimes the writing is in the sand as it were. The future of your company looks bleak, you’re drowning in problems incomings and outgoings and it looks as though your company may go into bankruptcy. What can you do? How can you save your company?
Unfortunately, there is no golden ticket, or secret solution, otherwise no company would ever go bust. However, there are a few quick fire and strong decisions you can make to a company the best chance of survival.
Look at everything coming in and out
As they say, cash is king. The incomings and outgoings of your company will define the success of the business. Simply put, if you have more money going out than coming in, things aren’t likely to go well. There is some room for manoeuvre though as it can be possible to have huge amounts of money coming in, yet you’re still in the red. This can happen if you’ve had to cover the cost of a large piece of equipment, or some unforeseen circumstances has meant you’ve had to dip into the cash.
What’s important is staying on top of the every day and looking at where you can make possible cutbacks. Is everything working as efficiently as it should be? Are you being sensible with your stock? Could you move to a smaller working space? If there’s any room to improve and cut down where you’re spending money, it’s the best place to begin to improve your cash flow and help ease any financial burden on the company.
Make sure your outgoings invoices are paid on time
Unable to pay your bills on time is arguably the most obvious symptom of cash flow problems, but it’s not always your fault. It is more difficult to pay your own costs if you are awaiting payment from one of your own clients. It’s crucial to constantly work to keep up a positive relationship with your own clientele because you might need to gently prod them into paying you sooner.
It might not be a terrible idea to look into invoice finance to help give you a break if you frequently find yourself waiting on your clients or if you have a lot of clients to wait on. An invoice finance firm will essentially grant you a cash advance on your unpaid invoices. They will then go out and get the invoices, giving you more time to concentrate on managing the firm. After collecting the money owed to them plus their commission, they will give you the change.
Work out a repayment plan
If you’re under a lot of pressure from your creditors and your daily trading is being hampered by a lack of credit, it might be worthwhile to look into a formal repayment plan. The amount of money you have in your bank account on a weekly, daily, or even monthly basis might be greatly impacted by having to constantly pay creditors.
It can be worthwhile to consider a formal repayment plan if you are struggling to make regular payments to creditors due to a backlog of debt of this magnitude. With the help of a repayment plan, you can consolidate all of your debts and make prorated monthly payments to your creditors. An insolvency practitioner creates a legal repayment plan on your behalf, shielding you from more creditor pressure.
In Summary
The most essential thing is to not panic if you’re having trouble getting a smooth flow of money coming in and going out of your business and it’s negatively affecting how well it’s doing. There are techniques to increase your cash flow levels and improve the performance of your company. Prior to considering repayment strategies or other sources of finance, consider what you can do internally. Sometimes, however, it’s better for everyone all round to simply close the company down, it’s not the result you’ve hoped for, but to stop any future stress and further financial risk it can sometimes be the best thing to do
