What does business recovery mean?
What does business recovery mean? When seeking support to assist with a financial crisis with your limited company. To operate a plan of recovery requires the services of a qualified licensed Insolvency Practitioner.
The primary objective of any IP remains the process of the rescue of the ailing business. Once achieved and the business trades profitably then the IP will step aside.
However, many circumstances affect the overall outcome and the strategy to be set.
Two main headings cover insolvency processes utilised to aid struggling companies then.
- Business Recovery;
- Business Rescue.
The ailing company will need to explore then if additional funding may help. The disposal of non-essential company assets to raise working capital. However, directors need to tread carefully then.
Insolvency procedures exist to allow such operations. They do, though, therefore, require a Licensed Insolvency Practitioner to be appointed. They include:
HBG Advisory offers options to rescue or recover your business.
For further reading, please click on’Company Rescue & Recovery‘
So what might these options include?
Renegotiating existing company debt with a Company Rescue
Therefore, a Company Voluntary Arrangement remains used to aid companies encountering a brief difficulty, and which will revert to trade their way out of any potential additional problems, once the current debts remain renegotiated.
A Company Voluntary Arrangement assists limited companies experiencing financial difficulties. A CVA may:-
- Write off an unsustainable debt left at the end of the CVA term;
- additionally, all interest and charges then stop;
- Then company creditors cannot seek additional legal action on you concerning any debts incorporated in the agreement.
What does business recovery mean? Operational Cost Reduction
Planning to reduce non-essential operational cost may avoid your business, then crashing into insolvency. If the cost-saving remain viably sustainable, then the saving may revert to paying off debt.
- software subscriptions,(Excluding essential licenses for operating systems);
- Non – essential staff training and development (Excluding regulatory ones);
- networking events. (Checking not to affect new business generation).
Streamlining your business in this way can increase efficiency, and provide a blueprint for future profitability. Keeping a close eye on stock levels and ensuring an effective ordering system will also help you generate more cash.
Alternative fast finance
Suppose your business needs a cash injection to overcome its current financial issues. Entering into a Factoring and invoice discounting agreement is fast to set up. It uses the amount of money in your sales ledger, enabling cash to be released far quicker, therefore boosting cash flow. Cash release upon demand of the user once Invoices approved, up to limits set.
Eligible companies can release more cash as their business grows, without the need for a high credit rating, or having to complete onerous loan applications.
Other funding options:
- Asset-based loans for companies with assets free of finance or with equity;
- Peer-to-peer lending.
Company administration remains a fast protective formal insolvency procedure. It provides companies with a temporary moratorium period so an IP may evaluate the best course of action for the failing company.
Once the company is in administration. The companies creditors may not proceed further with legal action. Then the appointed the administrator remains required to deliver any or more of three outcomes:
- Maintaining the company as a profitable going concern;
- achieving a more beneficial outcome for the company when compared to a liquidation;
- selling the companies property to discharge secured or preferential creditors.
Time to Pay (TTP)
HMRC allow companies considered viable additional time to settle tax arrears. However, HMRC only authorises this facility, subject to proof that any financial difficulties remain temporary.
At this point, company directors should approach a licensed insolvency practitioner for support. Dealing with the HMRC for a time to pay, requires credibility and accuracy. The HMRC will spot requests which may fail early on and will decline any TTP.
The maximum you may achieve to repay is twelve months. However, often the term ranges from three to six months.
When rescue is just not achievable
It remains the primary goal for your business to recover. However, the truth often pans out; sometimes, companies remain beyond rescue. Then, voluntary liquidation looms.
For experienced, commercial and professional recommendation regarding your company’s position financially. Please call John at HBG Advisory who will be happy to assist, and arrange a ‘free meeting with HBG Advisory‘. We may be contacted by:-
- Phone: 0800 612 5448 8 am to 9 pm, seven days a week.
- Arrange a free, confidential meeting online by booking a time and date on our VIRTUAL service, straight from the safety and privacy from your home or place of work.
- To view our management team, click on The Team at HBG Advisory.
- HBG Advisory are members of the TMA