Business liquidation is when a business closes because it cannot pay its business debts and its assets are turned into money which is used to pay off its creditors.
If your business has financial difficulties and is struggling to pay its debts, or its liabilities outweigh its assets then you should get some advice from a business turnaround professional. They are experts in this area and will be able to look at your businesses financial circumstances and assess whether it is possible to turn your business around.
The role of a Business Turnaround Specialist
A business turnaround specialist may perform the following tasks in order to get your business back on track:
- Examination of your management accounts and sales order book
- Creation of a business turnaround strategy, detailing timing, financial impact and methods of measurement to determine success
- Formulating a change management plan to deal with the likely resistance felt by many employees. Key staff members will clearly understand the turnaround plan and the consequences of not implementing the changes required
- Communication strategy to all staff to get buy in to the turnaround plan, this includes informing staff of job losses and reassuring remaining staff.
- Communicating with banks and lenders on the turnaround plans, and attempting to renegotiate terms
- Communicating to suppliers and renegotiating more favorable payment terms.
- Identifying assets which are not being used and liquidating them to provide extra cash, assessing overheads and limiting them where possible
Types of business liquidation
There are two main types of business liquidation which are:
- Compulsory liquidation : this is where a creditor will petition the court, because your business is unable to pay the debts that they owe and they don’t have enough current assets to cover the total liabilities
- Voluntary liquidation: is when the company directors or shareholders put the business into liquidation as it cannot pay its debts. An insolvency practitioner is then instructed to liquidate the company.
If you think you may be heading for liquidation it is best to get some advice straight away. You could contact a business turnaround specialist, as they are experienced in dealing with businesses in or facing insolvency. They will be able to explain all the options available to you, plus the risks and benefits of each choice, they will also be able to help you put your chosen plan of action in place.
To understand the whole range of options and to get help choosing the right one for your business contact us on 0800 597 4757 or enquire online using the form opposite.
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