GUEST BLOG: Is your business facing a financial crisis?

By Keith Tully, corporate insolvency specialist, Real Business Rescue 

Financial pressures can quickly emerge to impede the progress and threaten the sustainability of companies of any size and in any industry sector. The actions and the processes undertaken by company directors in these situations can be crucial in defining how matters unfold.

The first thing a director should do if their company is facing mounting financial pressures is to step back and take stock of what’s really going on.

Often in these circumstances, an all-action approach will be counterproductive and isn’t likely to get to the core of the issues at hand.

It might not be easy to step away but a broad perspective on matters is essential if a director and his or her management colleagues are to begin the process of turning around a worsening financial position and build towards a brighter future.

LIQUIDATE NON-ESSENTIAL ASSETS

If your company’s financial position worsens to the point at which it becomes insolvent then all assets with value will eventually be liquidated to raise funds to repay creditors. So it is worth taking steps to liquidate non-essential assets voluntarily to stave off the prospect of insolvency if your company’s finances are being severely stretched.

Generally, the voluntary approach will also enable a company to bargain for a better price for the assets being sold so swift and pre-emptive action will usually improve a company’s prospects of avoiding insolvency.

REDUCE THE SCALE OF YOUR WORKFORCE

Having to scale back a workforce is not a position that any company director wants to be in and the realities can be tough to cope with in any number of ways.

However, difficult steps such as a workforce reduction can become entirely necessary if a company’s financial position is becoming increasingly unsustainable and the prospect of insolvency is beginning to loom.

A PLAN OF ACTION

For directors tasked with turning around a company that’s struggling from a financial perspective, good communication with stakeholders can make a big difference for the better.

In particular, communicating a clear plan of action, even where it involves tough choices and significant challenges, is very important and can make the difference between a company staying in business and being wound up.

However, difficult steps such as a workforce reduction can become entirely necessary if a company’s financial position is becoming increasingly unsustainable and the prospect of insolvency is beginning to loom

INVESTIGATE FINANCING SOLUTIONS

There are more forms of financial solution available to businesses of all sizes than ever before and it is prudent for company bosses to investigate the full range of options available.

Even when a financial position seems to be dire and irretrievable, it could still be that there are specialist service providers well placed to help out and to offer realistic terms on essential finance.

SPEAK TO EXPERTS

The realities of leading a business that’s in danger of entering insolvency or is struggling to fend off creditors can be difficult to bear even for the most experienced and level-headed of company directors.

In these situations, seeking out the advice and guidance of third-party professionals with relevant expertise can be enormously helpful.