Top,Five,Company,Insolvency,Wa business, insurance Top Five Company Insolvency Warning Signs for your business
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The first quarter of 2009 saw difficult trading conditions for many businesses across the UK. The official Insolvency Service figures showed that in the first quarter of 2009, the number of companies being put into liquidation in England and Wales increased by over 50% compared to the same quarter in 2008. Many analysts are predicting that the economy is not likely to improve until the end of the year. Given that the pressure on business seems likely to continue for the foreseeable future, it is vital that directors and business owners make sure that they are vigilant about the trading status of their companies. One of the duties of directors is to ensure that the company that they are running does not trade if it is insolvent. If directors allow their company to trade while knowing that it is insolvent, they may be held liable for the businesss debts which are generated from that time onward. If you are busy with the day to day running of a business, it is all too easy to overlook the signs which would indicate that the company is at risk of trading while insolvent. However, this situation can be avoided if you ensure that you have good and regular information about specific areas of your business. I would suggest that during these difficult economic times, directors and senior managers take special notice in the following areas: 1. Make sure that you receive regular reports regarding the status of the companys current account. If the account is permanently at the limit of the overdraft then urgent action needs to be taken to improve cash flow. 2. Is the business holding on for one more sale, contract or big customer to solve the cash flow problem? In the current climate, you must realistically forecast the possibility that this event will not happen. Give yourself realistic deadlines after which alternative action must be taken. 3. Have your accounts and annual returns been posted late? If so, you need to understand why this is and take appropriate action. It may be a simple mistake. However, in times of financial difficulty, the accounts department will often be distracted by other pressures and overlook accounts filing deadlines.4. Often when a business is getting into financial difficulty, VAT and PAYE/NIC payments are regularly made late as available cash is being used to pay suppliers to keep the business running. This situation can not be allowed to continue. HMRC will apply for a business to be wound up if crown debts are continually left unpaid. 5. Are you unable to secure new credit or extend existing lines of credit for the business? This situation has become more and more common with the onset of the credit crunch and banks reluctance to lend and expose themselves to further risk. If you find yourself in this situation, you may have to consider other options such as cost cutting.If any of the situations highlighted above are identified, it does not necessarily mean that your business is heading for failure. Once the underlying reasons for the problems are investigated and understood, it may be possible to resolve them quickly through a change in business processes. If this is not possible and the situation is more serious, then it is important to act quickly. If you have been putting off difficult business decisions such as a redundancy programme to reduce cost, then a realistic view must be taken as to when this should be implemented. However, before making radical change to your business, my suggestion would be to first take advice from a business advisor with specialist insolvency knowledge. There may be different ways of looking at and resolving the problem which you had not thought about or were not aware of which may better safeguard your business for the long term.
Top,Five,Company,Insolvency,Wa