Do you recognise the signs of Corporate Insolvency?

By on February 20th, 2018

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Running your own business is both stressful and time-consuming and as a CEO or director, it is fairly easy to get caught up in the day to day tasks and not realise the fact that your company is hurtling towards the disaster that is corporate insolvency.

Corporate insolvency is when your businesses financial circumstances mean that you are unable to pay your debts, and if you find yourself in this situation it can be extremely damaging to your business.

Luckily there are a number of warning signs that precede corporate insolvency, so keep your eyes peeled for if you can notice any of these things happening within your company.

You have reached maximum borrowing

Most businesses need to borrow money at some point, but reaching the limit of your bank overdraft tends to be a sign that you should be concerned about corporate insolvency. If suppliers are refusing you credit and you do not own sufficient assets to obtain a secured short-term loan, this can also be a problem.

There’s no money to pay staff wages

If paying pay staff wages is proving to a challenge and you will only very slimly be able to make the payments that you need to, this is a sure sign that you are heading for insolvency. Technically, if you are unable to pay staff wages then you are considered to be insolvent.

You are receiving demands for payments

If you have received a Statutory Demand from a secured or unsecured creditor, or are constantly receiving threats of legal action against the company for unpaid bills, it may be time to consider the fact that your company could be headed for insolvency.

A Statutory Demand is often followed by a winding up petition, which could effectively mark the end for your company.

You don’t have the right systems in place

Without the use of cash flow forecasts, aged debtors reports, bank reconciliation’s and sales forecasts, it can be difficult for businesses to assess their performance and gauge how secure they are financially.

It also means that you are unable to see how much money you owe, which puts your business in a very vulnerable situation regarding your debt.

We have a wealth of experience dealing with companies slipping down the path that is “corporate insolvency”. If you are concerned about any of the issues discussed in this article, get in touch with us today to discuss your individual options.

 

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