Finance options for struggling businesses facing insolvency in Liverpool

When a company gets to a point where they can’t settle creditor invoices on time- or worse- HM Revenue and Customs are waiting for payment, directors often think they should just pull the plug and let the company go into liquidation. But is that what a director should do? Of course, they need to remember their duties under the Companies Act and in particular that they must act at all times in the best interests of creditors. Probably the best thing a director should do when the company’s finances are getting tight is to think about whether the state of the company’s financial position is temporary or whether it really is more terminal.

It’s a mistake to think that licensed insolvency practitioners merely spend their days winding insolvent companies up and sending staff to the dole queue. Your Liverpool insolvency practitioners will always try and find a way to help keep your struggling company in business and some sort of finance arrangement may well be a great way to put your failing company back on track. Let’s take a look at one possible option.

Invoice Discounting and Factoring

Your company is technically insolvent if it can’t pay it’s bills on time but if the situation is temporary, you might just need to ease up the cashflow to restore the company’s position back to good health.  The beauty of factoring is that it puts funds in the bank quickly. In the challenging economic climate of the last few years it has become more of a problem that businesses are becoming slower and slower to pay their bills. If your company is struggling to pay its own bills because you are waiting on your own debtors to pay you then you can use the value of your debtors to ut money in your bank account quickly through factoring. It is often a quicker, more direct and hassle-free way of raising needed cash than approaching the company bankers.

Invoice discounting is similar but leaves directors in control of collecting the debts. With factoring, it is the factoring company that chases your debtors for payment. When considering all options with your Liverpool insolvency practitioners, don’t hesitate to enquire about invoice discounting or factoring as an option. A good licensed insolvency practitioner will have local contacts in the invoice discounting and factoring world and can help faciliate setting things up so that you can concentrate on running your business free from the pressure of creditors chasing you for payment.

Don’t assume you must liquidate your company

Remember what we said earlier. Once you identify whether your company has a temporary cash flow problem or whether the company has more serious underlying issues, you will have a better understanding of whether you can save your company or not. Even if the company has to enter into some formal kind of insolvency, liquidation is not the only possibility. UK Insolvency Practitioners  can implement a rescheduling of debt repayments by way of a company voluntary arrangement would protect the company from creditor action and allow you to carry on trading and save your company.