When a business is struggling, it can be difficult to know where to turn for help. Business insolvency specialists are experts in helping businesses at risk of becoming insolvent. They can provide guidance and support to companies who are struggling financially and may be able to help them avoid bankruptcy. If you are looking for advice on how to save your business, or if you need help dealing with an insolvent company, then read on for tips on how to select a good business insolvency specialist.
Is your business at risk of insolvency?
If you’re not sure whether your business is at risk of insolvency, there are a few warning signs to look out for. Businesses can become insolvent for a number of reasons, including:
- Poor cash flow
When a company is not bringing in enough money to cover its expenses, it is at risk of becoming insolvent.
- Deferred payments
Businesses owing money to other companies or creditors may be at risk of insolvency, especially if those debts are not being paid on time.
- Slow, or decreasing sales
If your business is closing down, it is likely to become insolvent.
- Unable to obtain funds
You need additional funds to ensure your company can grow and compete. You are not able to extend existing loans or obtain new credit.
What is a Business Insolvency Specialist?
A business insolvency specialist is a professional who helps businesses at risk of becoming insolvent. They can provide guidance and support to struggling companies and may be able to help them continue successful trading.
At Corporate Lifeline, our business advisory consultants and business insolvency specialists have expertise in all aspects of insolvency.
We have already saved hundreds of struggling Australian businesses. We are sympathetic to your financial difficulties and our years of experience mean we have solutions available.
Our advisors will discuss your situation and develop strategies and options best for your and your company.
The prevention of insolvency
The administration of insolvent companies can be a difficult process. When a company becomes insolvent, it is often in a fragile state and any wrong move can lead to its collapse. Business insolvency specialists are experts in this area and can help companies through the administration process.
It is always best to seek expert financial assistance when you spot the first signs of financial difficulty. There are options available if you seek help before the business is insolvent. You should also note it is illegal, in Australia, to trade while insolvent. Your company directors are at risk of prosecution if they do nothing.
The administrator’s role is to review the company’s financial situation and make recommendations on how to improve it. They will work with the company’s directors, employees, and creditors to try and save the business.
Some of the solutions available for your business include:
When a business is insolvent, it can choose to appoint an administrator to take control of the company and try to save it. The administrator will review the company’s financial situation and make recommendations on how to improve it. They may also be able to negotiate with creditors to reduce the company’s debts. If you think your business might be insolvent, voluntary administration can be a good option to explore.
What is involved in appointing an administrator?
When a business appoints an administrator, they are giving them control of the company. The administrator will be responsible for making decisions about the company’s future and will work to try and save it from folding.
What are the outcomes of Voluntary Administration?
The administrator works on behalf of the creditors and will try to save the company. After a review of the financial situation, including causes of financial difficulties and behaviour of company directors, the three possible outcomes of voluntary administration are:
The administrator doesn’t believe the company can be saved. A liquidator will be appointed to sell the company’s assets. Funds will be used to repay all, or part, of the creditors’ outstanding debts.
- Deed of Company Arrangement
A DOCA is a documented plan to repay some, or all, outstanding debt. The document should identify the source of any additional funding and the schedule for repayment. If approved by the creditors, the company may return to the control of the directors when the conditions of the DOCA have been met.
- Return to normal trading
Investigations reveal the company is solvent and is able to return to trading as before.
When a company becomes insolvent, it may be forced into liquidation. This is when the company’s assets are sold off to repay its debts. The company is then dissolved and ceases to exist.
The liquidator will use any funds from the disposal of assets to cover their own expenses first, meaning it can be difficult for employees and creditors to receive any money back from the sale of the company’s assets. If your business is facing liquidation, it is important to seek advice from a business insolvency specialist.
After reviewing your company’s financial situation, plus your organisation and processes, your financial advisor may recommend a business turnaround. They may identify how a change in your financial structure will help return you to profitability.
Their review of your business vision and processes may highlight assets or areas of your business not performing as well as expected. Selling under-utilised assets and changing, or removing, staff or processes will help you to grow and compete.
Corporate Lifeline has a network of trusted lenders and commercial financiers and our advisors negotiate on your behalf, presenting them with your potential future situation. This will often encourage them to release funds you wouldn’t otherwise receive.
Negotiation with creditors
A professional financial advisor may negotiate more favourable repayment terms with existing creditors may be the best option for all involved.
Creditors will often be happy to extend the duration of any credit terms if the alternative is the risk of not being paid!
Options for Business financial recovery
Some of the options you may consider to resolve your businesses financial problems include:
- Analyse your spending
This means you should review your cash flow. A successful company means income is higher than outgoings and all debts can be paid in full and on schedule. Take a look at your budget and see where you can cut back.
It may be you identify job roles, or entire business areas, underperforming or not performing. In order to reduce your spending, it may be necessary to cease parts of your business including making some employees redundant.
This is difficult for you personally, but it is necessary in order to get your finances back on track.
- Review your debts
Another important step is to review your debts and try to negotiate lower payments with creditors. If you can’t afford to pay off your debts in full, see if you can at least extend the period of credit to reduce the amount you owe each month. This will help ease the financial strain and give you more breathing room financially.
- Seek professional help
If you’re struggling to manage your finances on your own, it may be helpful to seek professional help. You are great at managing your business but you probably don’t have a qualification in accountancy.
A business insolvency specialist can provide guidance and support throughout the financial recovery process. They will be able to offer advice on strategies and options you wouldn’t consider.
How to find the right Business Insolvency Specialist for you
When looking for a Business Insolvency Specialist, aim to find one you can trust. Here are a few tips on how to find the right Business Insolvency Specialist for you:
- Ask for referrals
Ask colleagues or other business owners and managers if they have used any financial advisors. Ask for referrals from friends or family, or do a Google search to find specialists in your area.
- Check out the company online
Does their website look professional? If it looks cheap and poorly set up and maintained then you should probably avoid the company.
- Are they experienced?
You don’t want to be their first customer! When a company has operated for a number of years, they will have more options and strategies available for your situation.
The benefits of using our Business Insolvency Specialists!
At Corporate Lifeline, our business insolvency specialists have expertise in all aspects of insolvency. Experience means they have solutions at hand for different situations and they are able to review your business, understand your financial problems and develop strategies to save you.
When you spot the early warning signs your business is beginning to suffer, financially, you should seek financial help as soon as you can. It is unlikely your business will recover without help.
Your business will get back on its feet and return to profitable trading with the help of a Business Insolvency Specialist at Corporate Lifeline.
Contact one of our professionals today.