Because last year was so unusual, a lot of people might have forgotten some of the golden rules for getting through the season with their mental equilibrium and waistlines intact with the various parties, events and family gatherings to juggle.
It’s also the same with money and gift buying.
Some people think they’re being efficient by shopping for everything they need in one big go - but then have to manage a large bill which will leave them short for the rest of the month or until their next pay period.
Others will buy some presents in November, or earlier, pay them off, then get the rest in December and pay that off when they can so it means their finances will be more manageable.
This also applies to businesses as well. How many would be able to pay off all their debts in one installment if they had to?
Or if they have several debts owed to various creditors and repaying all the minimum payments at one time would be impossible or leave them with very little working cash for the rest of the month?
A company voluntary arrangement (CVA) could be the solution they’re looking for to deal with their debt problems.
A CVA halts all debt recovery actions against a company while a licensed insolvency practitioner works out the repayment details with their creditors.
They will write off a proportion of the debt - which could vary - in return for them making regular but manageable payments for up to five years. The arrangement will then end and all payments will cease.
It’s vitally important to remember that a CVA might not be viable or appropriate for every business.
If they could not commit to meeting a regular payment even with a large proportion of debt written off, or the debt is sufficiently large that there is no realistic way of it ever being repaid then liquidation might be the most efficient and effective way forward for the company.
But if there is a plausible pathway for the business then a CVA is a good alternative to closing down.
Chris Horner, insolvency director with BusinessRescueExpert.co.uk thinks that a CVA can be an overlooked way of keeping a business alive and giving it a chance of returning to profitability.
He said: “The best way a business can make a CVA work is if they are generally well run and profitable but their debts are weighing them down and stopping them from investing, expanding or moving to the next level.
“It’s a great way for a company to keep trading but handle its debts in a more structured and manageable fashion.
“It’s not appropriate for every business. Not every CVA is successful and some companies that enter them will ultimately go into administration or liquidation if they can’t turn their fortunes around.
“If there’s no realistic way of becoming profitable even with debts drastically reduced in some cases then a CVA shouldn’t be considered or entered into. It’s not what every director wants to hear but it’s the truth.
“It would be a waste of their money and their and our time which would be better spent working on an insolvency solution that would have a realistic chance of success instead.”
The sweet spot of success for a CVA is a small one but if a business is in it then it can be truly transformative for them in the short and longer terms.
A business owner or director that commits their business to a company voluntary arrangement is usually signing their company up for a five year commitment but one that will solve the debilitating debt problems that are holding their progress back.
If you think that your business might meet the criteria for a CVA, you should get in touch with us as soon as you can.
We offer a free initial consultation where we can talk about the pros and cons of an arrangement and also explore some other options you might not have considered such as a business viability review or insolvency moratorium which could give you even more time to ultimately reach the correct course of action for your company.
That might be a CVA or could equally be another insolvency process.
Whatever is the right path for you and your business, we’ll be there to guide you down it - every step of the way.