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Business administration is a constructive process that aims to rescue your company; it is seen as a positive option for failing small to medium businesses. The process of business administration includes putting the company’s debts on hold whilst protecting its assets. This gives the business some space to try and resolve the difficulties that it is experiencing.

During this process, an administrator will take over the financial management of the business and will put in place appropriate business turnaround measures.

How business administration works

Business directors, partners, creditors and your bank can apply to the courts to appoint an administrator for your business.

A business administrator is a qualified insolvency practitioner who takes control of the financial management of a company when the company is facing financial difficulties. When a business administrator is called in, the business is described as having ‘gone into administration’. Their main priority is to turn the business around, by getting the business out of its financial difficulties and making a profit again.

If it isn’t possible to turn the business around, then the Business Administrator will sell off any assets and try and paid off the creditors. They will try and get the best possible deal for the creditors. If necessary the Business administrator will fold the company.

How to avoid business administration

The best way to avoid business administration is by cash flow forecasting, for the year ahead.

A cash flow forecast is simply a forecast for the coming months of all the money that is expected to come in and go out of the business on a month by month basis. You need to be realistic with your cash flow, there is no point being too optimistic or pessimistic in your forecast as this will not help you to plan properly.

Cash flow forecasting can help you to identify if you will experience any cash shortfalls, due to identified gaps of money coming in and needing to go out. If you spot a shortfall then you can plan how to deal with it and where you can go to get some extra credit.

Finance options

There are several ways you can boost your credit, some of the options include:

  • Invoice Factoring
  • Invoice Discounting
  • Asset Finance
  • Credit protection

Invoice factoring

Factoring can release up to 95% of the cash tied up in your unpaid invoices, often within 24 hours of you raising the invoice. The Factoring Company will manage your sales ledger, credit control and payment collection process.

Factoring improves cash flow which can help you to grow your business, it can also save you time and resources as the Factoring company chases the payments on your behalf.

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.