Published: 09/06/2021 By Jane PriceThere are usually several routes out of crisis but not all lead to the same outcome in the long term. For most business owners there are two clear options - save the business or just let it collapse.
The value of an Insolvency Practitioner (IP) is that, having faced this decision many times before they are able to identify whether there is a realistic chance of survival, of the business recovering and succeeding overtime. This is one of the key roles of an experienced IP, working with the business owners and managers to try and identify the optimal route out of a crisis. But IP’s can help to manage the crisis in the short term, even if that means taking formal proceedings.
Changing company's culture or altering the product offering to strip out loss-making product lines can take time, but there are sometimes a number of simpler, quicker and important measures to help prevent the total collapse of a business, even if it needs to go through a formal process to emerge stronger.
Getting cost controls properly in place, insisting all purchases (however small) are signed off centrally by the managing director or finance director, chasing harder to collect outstanding debts, or agreeing new payment terms with creditors can have a quick impact and help ease an immediate crisis.
The most likely immediate priority in managing liquidity crisis is reducing costs while maximising income. This requires difficult decisions that get to the fundamentals of the way a business organises itself and operates. This is another way in which the independent outside voice of the IP or other advisor can make a difference.
Crisis management always involves tough decisions and often the need to use the range of insolvency measures open to the IP. These decisions are never taken lightly, but are often in the best interest of creditors, employees and the business owners.
At the point a company is technically insolvent, or there are doubts about its insolvency, the directors duties change, with them having to act in the interest of creditors rather than shareholders.
Take the first step today in dealing with your financial challenges, get access to our Licensed IP's who are ready to guide you through all the available options.
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