Warning Signs
Very few directors set out to manage insolvent businesses. Whilst this is an obvious statement, it is important to stress. Few SME companies have all of the necessary skills in all levels of the management of the business to cope with the huge burden that insolvency can place on a company.
It is also apparent in most distressed companies that we see the management expend a large proportion of their available time on fighting fires. Focus on their specific roles and delivery of performance targets are rarely achieved when poor cash flow is constantly the main issue in each day.
In our experience cash flow pressure that distressed businesses suffer starts quite early on. The directors get used to dealing with minor issues, however they often grow into much bigger issues quite quickly. Failure to collect debtor payments on time can lead to missed payments to creditors. This leads to loss of trust and the breakdown of communication.
Typical signs of cash flow pressure include:
1. | Your company cannot get new credit or extend existing credit |
2. | You do not pay to creditor's terms |
3. | Creditors regularly phone you chasing payment |
4. | You spread credit around by opening accounts with new suppliers |
5. | You have had a Court summons or judgment |
6. | You have broken promises to creditors |
7. | You have had visits from Sheriffs or bailiffs |
8. | You have had a statutory demand or a winding up petition |
9. | You have paid unsecured creditors instead of paying the Crown debts |
10. | You are not filing VAT returns or paying the VAT due on time |
11. | You have failed deals with the taxman |
12. | You think that one more sale, one more contract, one big customer payment will solve the problem? (It won't) |
If you are suffering from these ailments then clearly the business is under real pressure. You will become less and less efficient over time and decision making will become more and more difficult.
Our aim is to deal with that creditor pressure, refocus you on YOUR JOB and take the business into a safe, protected zone while it is restructured.
The earlier an under performing business is identified
the better the outcome
In the first instance contact us immediately to arrange a free consultation.