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Business and Company Debt Help

When a business enters a period of poor cash-flow or changes in the market it trades in? Then changes need to be made to support the business and ensure that the creditors’ interests are protected.

HBG Advisory offers businesses support with ways to deal with business debt. Our business supports directors of limited companies. So they may deal with stressful times while guiding them through such problems.

So What is a Business Debt?

Business debt may not be, however, just one item.

So carry out with an Insolvency Practitioner a pre insolvency review.

Therefore prepare the following:,

  1. Make a note of all monies owed (Company debt);
  2. Detail priority debts by payment date and their amounts due;
  3. Look at revenue and ways to increase, perhaps through new channels;
  4. Review operation costs and how they may be reduced
  5. Can you realise the value of any company assets not required to reduce your business debt?
  6. Review companies finances and opportunities to increase working capital.
  7. Ensure all terms of trade are reviewed and possible price increases?

The preparation of:

  • Cash-Flows;
  • Projected Profit and Loss Accounts and Balance sheets;
  • Along with a marketing plan.

Remain important if you have any chance of managing debt in your business.

For further reading, please view Company Debt Advice.

What are the business priority debts?

  • HMRC: Income Tax, PAYE & National Insurance;
  • Rates of the business;
  • Rent of business premise;
  • Suppliers;
  • Companies Accountants.

Other payments are considered non-priority when a business is in debt issues.

Business and Company Debt is good for your company.

Having company debt can be positive. Indeed, it is part of businesses working capital and helps cash-flow.

Many businesses grow on the back of company debt. However, it can be a primary reason for a business to fail.

Directors therefore need to ensure debt does not either:

  • Impact on cash flow, so your business may no longer pay its liabilities as and when due. Therefore, insolvent by cashflow; or
  • the debts of the business exceed its assets. Therefore, insolvent by the balance sheet.

Getting out of debt?

Upon accepting your business debt position. Directors need immediate action.

De[ending on the viability of the business will weigh heavily on the strategy moving forward.

If the business is viable and easily proven,

Then options exist:

  • Usually, businesses affected by cash-flow stop paying HMRC to ensure suppliers continue to supply. However, HMRC now has a crown preference, and no longer remains as unsecured creditors. Therefore, rather than stop paying, request a Time To Pay arrangement. If though option remains refused and your business remains unable to pay? Then you need to seek help from a licensed Insolvency Practitioner. Do not walk away from Dealing with HMRC Company Debt. If you are a contractor, view HMRC support for Contractors during Pandemic.
  • Seek additional working capital raising additional finance. This should remove creditor using pressure to force payment, and allow directors to remain focused on securing the business’ viability.
  • If you have failed to secure sufficient finance or HMRC, refuse a Time to Pay? Directors then may consider a Company Voluntary Arrangement (CVA). A Company Voluntary Arrangement allows a limited company to arrange a formal legally binding agreement between its creditors and the company. To negotiate a CVA, the company requires Licensed Insolvency Practitioner services, such as those at HBG Advisory. Once the proposal is prepared. The company’s creditors vote on it, and if passed, the company is then in a CVA.

However, if the above is not an option?

Then the company may be deemed insolvent. Therefore, directors need to consider a voluntary insolvency procedure.

At this point, directors should seek Business Insolvency Advice & Support. And read our Simple Business Debt Guide.

HMRC and Business debt?

Recent changes effective December 1st, 2020. Have affected HMRC rankings in an insolvency procedure. They now have CROWN preference.

So when dealing with the HMRC, it remains vital that directors:-

  • Contact HMRC as soon as the problem rears its head;
  • Be honest with your issues;
  • Maintain communications;
  • Answer letters in a timely fashion.

Failure to cooperate will cause major issues with how HMRC deals with tax collection. We forget their job is to collect monies on our behalf. They have a robust system, which they strictly adhered to.

So do not ignore the HMRC.

Free Insolvency Advice for my company

Employees and redundancy when in liquidation
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