Christmas is creeping up, for many a time of joy, but for some a time of dread and debt… the...
It is always better to get Insolvency advice sooner rather than later, but how do your spot the warning signs that your business is heading for insolvency? When directors and Managers are focussed on running the business sometimes the warning signs of insolvency can slip through the net. It is important that you take time out to do regular business health checks. By regularly taking time to see your outgoings and work out your cash flow you can anticipate any financial problems and work out solutions before your business becomes insolvent. Even if your business is not at risk by regularly going through your expenditure you can make savings and increase profits so everyone should be doing a business health check.
Check if your business is Insolvent
You may think that if your business was insolvent you would know about it, but it can creep up on a business, especially after large bills such as corporation tax, VAT, salaries etc, before you know it you are a few customers not paying away from a depleted cash flow.
- Can you pay all your debts when they are due? Is your expenditure more than your expected turnover Do your liabilities exceed your assets? Are you constantly being chased for payment by creditors? Are you having to leave bills till the final invoice or longer?
If any or all of these apply to you then your business may be at risk and you should get Insolvency advice sooner rather than later.
Cash Flow Problems
Many businesses have cash flow problems, this doesn’t necessarily lead to insolvency but can be an early indicator that you need to look into business processes to avoid insolvency. Payment from debtors should be managed efficiently to make sure their cash flow problems do not affect your own cash flow. Your cash flow can be affected significantly by the following:
- Having to pay a lot of late penalty notices Debtors payments are not on time Being unable to place new orders due to other orders not being paid Bad credit
If you are falling behind on your own payments then creditors may force you into insolvency. For advice from licensed Insolvency Practitioners get in touch with Lines Henry.