There are almost always warning signs your business could be in trouble, and approaching business insolvency.
The first step to turning around your business is to have a good honest look at how your business is running and identifying the problems.
Some of the warning signs can include:
- Missing tax payments – missed payments to HMRC are often the first clue to business insolvency. Companies often decide to miss PAYE and VAT payments if they are struggling for cash because there are no immediate consequences to non-payment.
- Always relying on your overdraft – if you have no funds in your business account, you may need to keep using your overdraft to its limit in order to pay creditors and staff. If you keep doing this your bank may become worried and may reduce your overdraft or request some form of security to be put down.
- Late payments to creditors and reduced credit – if you are constantly struggling to pay your creditors on time, and only pay once you receive warning letters you may also find that your suppliers reduce the amount of credit offered to you or stop doing business with you at all.
- Your customers are taking longer to pay you – if your customers are taking longer to pay you, you will be spending more time chasing them and more time trying to juggle your money until you do get paid.
- Lack of processes and procedures- if you don’t have a business plan, cash forecasts and budgets and management don’t meet regularly to plan ahead, then you could find that some essential tasks are not getting done because of lack of planning and control.
- Directors overspending – if Directors are taking very high salaries and expenses are getting out of control
- People issues – if you spend the majority of your time firefighting, management are not getting on and working together and morale is low with a high turnover of staff
If you are worried about your business
Just because you recognise some of the above warning signs, it does not mean that your business is necessarily heading for trouble, however it does suggest that you may have some problems that need to be addressed.
If you do recognise any of the warning signs, it is best to address them early instead of ignoring them, the quicker you tackle them the more likely that you will be able to resolve them.
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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