Staying on top of company finances is difficult. It is quite easy to see how things can quickly get out of hand, but if and when this does happen, it is then important to remember that everything can still be managed. And although a business’s financial struggles affect a wide variety of people associated with the company, it doesn’t have to be a wholly uncomfortable period for everyone.
The First Signs
Most financial problems with businesses are due to cash flow – namely not enough of it being available to the business. First of all, if you’re worried about your business going into debt, make sure you make forecasts for the foreseeable future to monitor cash coming into the business. If this isn’t the case, then it’s time to take action.
As with most things, the earlier you spot a problem, the easier it is to address. Here, it is more important to become proactive. Tighten credit control, chase due payment, and begin to talk to your bank. This is important so as to understand the health of your finances, and to begin to form a good relationship with them should you need to correspond with them more if the situation worsens.
It’s also important to talk to investors here, so that they know what to expect. It is perhaps not best to worry workers too early, but in general, it is important to continue to communicate with them and make them feel valued, so any future blows to their job security are at least softened.
The Next Steps
Should things worsen, there are still many opportunities for your business. One thing that is important is not to trade when insolvent, as this is illegal and will only add to your worries.
If your creditors or stakeholders decide to apply for a court order over debts, then you may go into administration. If your business should go into administration, you shouldn’t necessarily see it as the end of the business. Thanks to the Enterprise Act, the accountants who take over your business will attempt to return it to good health and keep it alive.
Whether your business is bankrupt or not, there are still several options for paying off your debt, as listed on the UK government website. Other places which may be worth looking at include the Money Advice Service and the Citizens Advice Bureau. Although the Citizens Advice Bureau tends to be more relevant to individual debts, they still offer useful information which is applicable to businesses as well. Elsewhere, banks such as RBS offer guides on how best to spend your money or deal with situations like this.
Hopefully, knowing that there are options out there for your business will help you remain positive. Although, obviously this is easier said than done. At times like this it is important to talk to people, whether personal friends or professionals, and keep check of your health. The same applies for people who work at the business who may be concerned about their livelihood.
If you remain upbeat and communicative, even when the chips seem down, this should have a positive effect on your team rather than a negative one. A sense of togetherness, alongside a proactive and strategic approach towards managing your finances, will help push your business through to the other side.
Richard Strang is the Director for the business finance solutions company- Business Recovery Financial Help (BRFH).