Insurance 30 July 2018

Recovering your business: How to bring a struggling firm back from the brink

Often the sorts of issues that threaten business survival can’t be predicted
It doesnt matter how big or successful a business is, running one well is hard work. If you’re a startup, a big hitter, or even if you dominate the market, things can go wrong and sometimes things simply don’t work out. Ed Wade, from insolvency practitioner Wilson Field, offers company owners pointers on recovering a business from the brink.

The business plan just might not be right, unexpected costs could put the business into negative cash flow, or perhaps the market just isnt ready for your big ideas.

However, just because your business hits a few financial stumbling blocks, it doesnt necessarily mean that it has to spell the end for your business. Depending on the situation the business finds itself in, there are various ways it can be rescued.

Cash flow issues, repayments and debts Invoice finance and commercial finance

Often these sorts of issues can’t be predicted. If an expensive piece of machinery unexpectedly breaks, the cost of replacing it could be huge and potentially put a business into turmoil. It could be late, or unpaid invoices, halting up cashflow and stopping a business from making outgoing payments.

When in this situation, it’s critical that owners don’t bury their heads in the sand, but instead try and tackle the issue head on as there could be potentially, business savings solutions available.

Late paying clients is a common problem for businesses and it can be a huge problem. If a business ends up waiting for money to come in, it can have a drastic effect when it comes to covering its own costs. This can hold up a business and gradually put the business into negative cash flow.

Invoice finance, could end up being a vital solution. Effectively, it enables a business to take out a loan based upon the value of its unpaid invoices.

A factoring company will lend a business up to 90% of an invoices value, pending their quality and the potential risks involved. For those who commonly suffer with late paying clients there are huge benefits to invoice finance.

Alternatively, if it’s the cost of replacing assets which is costing your business too much, a possible solution could come in the form of commercial finance. Commercial finance covers a few different options such as asset finance and re-financing.

If you end up being hit by a large debt, which ends up hitting you through the form of needing to buy a new asset, then naturally asset finance would be the right option. This allows businesses to purchase an asset over a set period of time, as appose to paying in one lump sum and potentially disrupting cash flow.

If, on the other hand, your business is asset rich but cash low, re-finance would be the way to move forward. This allows businesses to borrow money which is based on the value of its assets, this can help raise money and aid cashflow.

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