It’s fair to say insolvency practitioners don’t enjoy the best reputation among business owners. And we can kind of see where people are coming from.
There’s a bit of a Grim Reaper vibe surrounding the whole insolvency sector. Like the Reaper, most people would say they’d rather not have dealings with an insolvency practitioner. It means your business is in less than optimum health.
However, from our side of the fence as certified insolvency practitioners, we’re keen to let people know that we’re not all about the doom and gloom. The sum of what insolvency practitioners do is not all about stepping in when companies are failing and managing how they are wound down so creditors can pick over the bones.
In fact, the majority of our work is concerned with company rescue, not shutting companies down. Even when we are appointed as Official Administrators in our capacity working for the Insolvency Service, the first thought in a company administration is – can we find a way to keep this business afloat AND pay off its debts?
When your business is facing mounting debts and struggling financially, the hardest thing is trying to go it alone. Insolvency practitioners can be the friend you need to help you through the toughest times. Here are three examples of how.
Help to restructure your business to avoid insolvency
Despite their name, insolvency practitioners spend much of their time helping businesses avoid insolvency. In fact, insolvency professionals say this kind of work takes up roughly 40% of their time – a sizeable chunk considering the other hats they wear as Official Receivers in liquidation proceedings, Administrators and so on.
If you are worried about your company’s financial situation, you don’t have to wait until you can’t pay your bills to contact an insolvency practitioner. Get in touch early, and our expertise can help you restructure your company’s finances to put you on a firmer footing.
Deal with creditors on your behalf
One of the hardest things in business is having to deal with creditors and suppliers who are breathing down your neck chasing money. When you have hit cash flow issues and can’t find the money to pay on time, this can be incredibly stressful – especially if your creditors have lost patience and are threatening legal action.
A key part of an insolvency practitioner’s role is to handle communication between creditors and debtors. This includes negotiating payment plans and other arrangements. It serves to take the heat and emotion out of things. Our role is to use our expertise to find the best possible outcome for all parties, so everyone wins.
Reduce your debt liabilities
Arguably one of the most useful things an insolvency practitioner can do for your business is actually reduce the amount of debt you owe. This is normal practice when negotiating a Company Voluntary Arrangement (CVA) on behalf of an insolvent company.
The proposition put to creditors goes along these lines – as things stand, your company doesn’t have the assets to pay what it owes. If creditors pursue a winding-up order and the business is liquidated, they will only get back a fraction of the debt by the time all creditors take a peace.
The business continues to trade well, however. If given the chance to continue as a going concern, in time it will accrue more value and creditors will stand to recoup more money than if it goes under in its present state. But to get there, it just needs a little breathing space, i.e. creditors agreeing to write off a portion of the debt (but still stand to gain more than pursuing a liquidation).
Our professional team of insolvency experts are always on hand to offer free, impartial advice on how your business can get back in the black. Get in touch with us today to find out more.