We’ve enjoyed the burst of energy Easter and the bank holiday have brought us with the longer days and nicer weather we’ve been getting.
Hopefully business has been picking up as well but for directors facing ongoing financial strain, brighter days might seem some way off.
We know how hard it can be, but ignoring ongoing problems and difficult conditions can lead to even more significant trouble down the line, particularly when the real holiday season and summer months arrive.
The danger of delay – why waiting is risky
It’s human nature to put off difficult decisions. It’s always easier to hope that something will turn up whether it be sales increasing; new clients being gained or cash flow issues will somehow resolve themselves.
Unfortunately problems like mounting supplier debts, unpaid HMRC bills like VAT or PAYE or struggling bank balances rarely disappear on their own – delaying action often makes the situation worse.
- Problems escalate: Small financial cracks can quickly widen into bigger chasms as repayments are missed. What is just about manageable now can quickly become untenable and overwhelming.
- Options shrink: The longer directors wait, the fewer choices they typically have. Early action might allow for restructuring to positively impact a company’s finances whereas later intervention might only leave liquidation.
- Summertime slowdown: While some seasonal businesses have their busiest time of the year during the summer, most others experience quieter periods as clients, suppliers and staff take some well-earned leave. Fighting various financial fires with staff away or clients being unresponsive or unavailable is both stressful and inefficient. It could mean that important decisions are taken urgently and without proper consideration or planning.
Take control of your summer – proactive steps for directors
There are some decisive steps that can be taken to bolster a struggling business – if they are taken now.
- Financial health check: Work with your accountant to take a clear, objective look at your company’s finances. Don’t bury your head in the sand – make sure you have a good understanding of your current cash flow, debt levels, profitability and tax liabilities.
- Impartial professional advice: Get an unbiased view of your unique circumstances from a business professional. Their advice will usually lead you to consider options you hadn’t previously considered viable. Without strategy, any plan is just wishful thinking.
- Explore your options: Depending on your precise circumstances, you might be able to consider:-
- Restructuring: Whether this is a formal agreement such as a Company Voluntary Arrangement (CVA) or administration or negotiating acceptable payment plans with creditors or HMRC through a Time To Pay arrangement, these will shelve any legal actions against the business and give you a clear map and timetable to work towards
- Refinancing: With interest rates dropping, it might be possible to secure new financial funding or borrowing to ease cash flow pressures
- Operational changes: It might be necessary or advantageous to implement temporary or permanent cost-cutting measures or strategic shifts
- Orderly closure: Sometimes it’s just not viable for a business to continue but directors can still maintain an element of control if they close through a Creditors’ Voluntary Liquidation (CVL) rather than waiting for compulsory action to be taken.
Act Now and enjoy a better summer on your terms
By addressing financial challenges proactively you give your business the best chance of a positive outcome.
Not only will you maintain control over the process and potentially preserve more value in the business but you can reduce personal stress, and increase the likelihood of securing a stable future – allowing you to actually enjoy the summer months.
If your firm is showing signs of financial strain, don’t wait for summertime sadness to set in. Use this window of time now to help make informed decisions.
Get in touch with us today and arrange a free initial consultation with one of our advisors.