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The majority of small and medium size businesses have experienced problems with their business debt.  This could be due to the loss of a large client, a sudden downturn in orders or late payments from customers. It when these issues keep occurring that you need to take action, the alternative is that your suppliers will take action against you.

What action can my suppliers take?

A supplier can pass the debt onto a collection agent or a solicitor to chase the debt. They can apply for a CCJ and if the debt is still not paid then they will issue a Statutory Demand giving you 21 days to make a payment. Failure to pay the debt after 21 days may then entitle the supplier to issue a winding up petition. If the debt is still not dealt with, the supplier could force your business into liquidation.

All of the above can be prevented if you take action and advice now.

What steps should I take?

Our advice is always seek assistance from the experts, you need to know if your business can be saved and whether it is advisable to continue to trade. You could end up losing more of your personal money and becoming personally liable for some of the business debt. We can provide you with the guidance you require.

What are my options?

Asset based financing option

You could release the value in your outstanding invoice ledger buy using an invoice finance or factoring company. There are numerous options, some are where your customers need not know that you are using a third party company as you continue to collect on the invoices. You could alternatively allow the third party to collect your invoices taking away the pressure and reducing resource requirements.

If your business has high value assets then you may be able to release the equity with a loan secured against that piece of machinery or equipment.

Make formal payment arrangements (CVA)

If your business could be profitable once you’ve resolved this temporary cash flow problem then a Company Voluntary Arrangement could be the solution. This allows you to make one monthly payment to cover all of your outstanding unsecured debt. The payments usually last between 36 – 60 months and a CVA stops all legal action and any interest from accruing on the debt. As long as you maintain your payment and your usual ongoing commitments you are able to continue to trade and regain some stability. Further information here

Administration and pre pack sale

If your suppliers are threatening to liquidate your business then you could place it into administration, buy back the business assets and continue to trade. This is only viable if the business would be successful if it no longer had the old debt holding it back. The debt of the old business would be dealt with by the administration giving the new company a fresh start. The sale is usually agreed pre administration where the administrator obtains the best price for the assets. The sale will then take place once the business enters administration and the phoenix company continues to trade.

Administration is a powerful tool, contact us today to see if it is the right option for you

Liquidating your Business (CVL)

If you don’t believe that your business can become successful again or you have simply just had enough, you could close your company down.  You appoint a liquidator who sells the company’s assets to pay the suppliers and any outstanding debt is kept within the liquidation. You can walk away from the company at this point and even purchase the company assets from the liquidator. A Creditors’ Voluntary Liquidation may be the right solution for you, call us now for free advice