Why do small businesses get into financial difficulty?
Did you know that over 50% of small businesses in the UK fail due to financial difficulties? Running a company is challenging at the best of times, and the most common reasons directors find themselves in trouble include:
What does insolvency actually mean?
Insolvency, put simply, means that your company owes more money than it can afford to pay, either from its available cash or by selling its assets.
Important legal note: As a director, if you suspect your company is in financial difficulty, it is your legal responsibility to resolve the situation as quickly as possible. Failure to act may constitute wrongful trading, which can result in personal liability.
We know it is very tempting to ignore problems and hope they resolve themselves, but this rarely happens. Directors usually try many tactics over a period of time before seeking help. The sooner you act, the more options are available to you.
What are the options for an insolvent company?
If your company is insolvent, there are several recognised routes forward. We can discuss which of these is best suited to your situation:
Debt Negotiations & CVAs
It is often possible to negotiate payment schedules with your creditors. A Company Voluntary Arrangement (CVA) is a legally binding agreement allowing you to repay debts over time while continuing to trade. Sometimes a single conversation with a creditor is enough to move things forward.
Company Rescue & Administration
Where the business is still viable, it may be possible to restructure it through administration, a legal process that protects your company from creditors for a defined period while a rescue plan is implemented.
Additional Borrowing
In some cases, additional borrowing can bridge a temporary gap, though it must be approached carefully. Borrowing to avoid a crisis can sometimes inadvertently cause one. We'll help you assess whether this is genuinely appropriate for your situation.
Debt Collection from Customers
If customers owe you money, actively pursuing those debts can significantly improve your cash position. We can advise on the best approach to recovering what you're owed.
Company Liquidation
Where a business is no longer viable, an orderly liquidation, selling the company's goods and assets to pay creditors, is often the cleanest outcome. We guide you through this process and connect you with licensed practitioners.
How we'll help you
Insolvency South East has many years of experience assisting directors of small and medium-sized businesses, both self-employed individuals and limited company directors, navigate financial difficulty and decide on the correct way forward.
All we ask is that you have a rough idea of how much you owe, or access to that information, so we can help you work through it. No matter which route you take, our advice will always be free of charge and given in complete confidence.