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Business insolvency means the inability of a business to pay off its debts. There are two type of business insolvency:

  • Cash flow insolvency, this is where a business is unable to pay its debts when they are due
  • Balance sheet insolvency is when a business has negative net assets, so in other words their liabilities exceed their assets.

Insolvency

Insolvency is confirmed when one or more of the businesses creditors takes legal action to recover its debts. All businesses can be at the risk of insolvency, particularly if they are reliant on a small number of customers, who have become slow payers.

What to do about insolvency

Here are some tips:

  • Act as quickly as possible as soon as you think there may be financial difficulties
  • Notify the board, and hold regular board and management meetings
  • Keep accurate minutes of meetings, so there is a record of what you have been doing to resolve the insolvency
  • Keep a written record of all difficult decisions taken
  • Keep accurate and up to date financial records, have a clear picture of assets and liabilities
  • Sell assets for their true market value
  • Submit tax returns and accounts on time, and pay taxes when they are due
  • Respond to petitions within the time frames stated otherwise your business facilities may be frozen
  • Communicate with staff, creditors, customers and your bank
  • Make a plan for dealing with the insolvency and get the board to support it
  • Take advice from an insolvency company in the UK

Insolvency Company UK

If you believe that your business is insolvent, or your business is suffering from financial difficulties it is important to contact an Insolvency Company in the UK. As a Director of the business you are responsible for the business and the interests of your creditors, so it’s important to take action to try and turn things around as soon as you can.

Insolvency Companies in the UK are experienced in dealing with businesses in or facing insolvency so it is worth taking some free advice before you decide on a course of action. A professional 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.