Each year, many businesses become insolvent, or declare themselves bankrupt. Though it may feel like one of the most challenging times your business has ever faced, insolvency does not need to spell the end of the world for your business career or your professional projects. When handled properly, with the help of specialised insolvency services, insolvency can be completed in such a way that the financial costs to your business are minimised whilst keeping your creditors happy.
When is my business in danger of becoming insolvent?
A business will become insolvent if two key conditions apply:
- The business is unable to pay its debts.
- The business’s liabilities outweigh its assets.
As a result, a business that is insolvent – or running the risk of insolvency – will find it very difficult to continue trading. If you own a business in Manchester, for example, and it meets either or both of the two conditions listed above, it is time to seek the help of professional insolvency services in Manchester.
What help can I expect from professional insolvency services?
When your business is in danger of insolvency, you can either plan to allow your creditors to start liquidating your assets and recovering their debts straight away. Alternatively, you can put your business into administration, which means handing over the reins to a specialist who will be able to sort out all of your assets and balance your books. When your business is in administration, your creditors will not be able to recoup their debts directly from you. Rather, they will need to go through the court. More information about the insolvency and administration processes can be found here. Whatever the best option for your business is in a situation of insolvency, however, it is crucial to get professional help from an insolvency specialist.
How to avoid insolvency
Obviously, no business owner or CEO wishes to find themselves at the helm of an insolvent business. As such, it is a good idea to be able to carry out insolvency checks so that you can take positive action sooner rather than later:
- You have borrowed to your limits and are finding it difficult to borrow more money to keep your business afloat.
- You are finding it hard to pay your employees’ wages.
- Creditors have started making legal demands for payment (this is often because savvy creditors have got wind of the fact that your business is an insolvency risk)
- You cannot pay debts in time.
- Accurate information about your business’s performance is not forthcoming. Insolvency can often be caused by haphazard management and poor financial planning.
If you notice even one of these warning signs, it is a good idea to contact an insolvency specialist as they could be able to pull you back from the brink of bankruptcy. Then, you can keep your business afloat in the future by following sound financial advice.