Published: 26/04/2021 By Jane PriceIf you missed parts 1-3 of our Decline and Recovery curve blogs see links below
While the word crisis is somewhat overused in modern life, a business that ignores signs of distress will eventually hit crisis point. The business may get into extreme difficulties due to a lack of liquidity that makes it impossible to meet overheads, pay staff, taxes and fines or simply finance the running of the business. Without cash, it is a fair assumption that any business will seize up, stagnate and eventually die.
By the time a situation of distress has developed into a full-blown crisis, there are fewer options open to the business owner and the IP. In general, IPs would always rather be approached when a business is further up the decline curve, with problems identified at an earlier stage and more time and resource available to help with the recovery.
However, even at a later stage, it is still better to seek advice and help from a licensed IP than to do nothing, or to try to resolve things without help. Clarity of thinking is a major advantage when dealing with a crisis and the distance offered by a third party – not to mention the vast experience and technical expertise they bring – allows an IP to offer the best possible advice.
An IP will help a business owner consider all the possible ways out of a crisis. At this late stage it is unlikely that there will be an alternative to some kind of formal insolvency arrangement. It is better to do this voluntarily with the help of an experienced professional adviser than to face it alone.
And it is worth noting that if you seek advice from an unregulated adviser, they will then have to pass you onto a licensed IP to implement a solution. This, and the fact that IPs are regulated, is why it makes sense to go to a licensed IP directly.
Decline and Recovery Curve - Part 1
Decline and Recovery Curve - Part 2
Decline and Recovery Curve - Part 3