| -- End Ad Box ---> | | | | 3. Have your accounts and annual returns been |
| The first quarter of 2009 saw difficult trading | | | | posted late? If so, you need to understand why this |
| conditions for many businesses across the UK. The | | | | is and take appropriate action. It may be a simple |
| official Insolvency Service figures showed that in the | | | | mistake. However, in times of financial difficulty, the |
| first quarter of 2009, the number of companies being | | | | accounts department will often be distracted by |
| put into liquidation in England and Wales increased by | | | | other pressures and overlook accounts filing deadlines. |
| over 50% compared to the same quarter in 2008. | | | | 4. Often when a business is getting into financial |
| Many analysts are predicting that the economy is not | | | | difficulty, VAT and PAYE/NIC payments are regularly |
| likely to improve until the end of the year. | | | | made late as available cash is being used to pay |
| Given that the pressure on business seems likely to | | | | suppliers to keep the business running. This situation |
| continue for the foreseeable future, it is vital that | | | | can not be allowed to continue. HMRC will apply for a |
| directors and business owners make sure that they | | | | business to be wound up if crown debts are |
| are vigilant about the trading status of their | | | | continually left unpaid. |
| companies. One of the duties of directors is to | | | | 5. Are you unable to secure new credit or extend |
| ensure that the company that they are running does | | | | existing lines of credit for the business? This situation |
| not trade if it is insolvent. If directors allow their | | | | has become more and more common with the onset |
| company to trade while knowing that it is insolvent, | | | | of the credit crunch and banks reluctance to lend and |
| they may be held liable for the business’s | | | | expose themselves to further risk. If you find |
| debts which are generated from that time onward. | | | | yourself in this situation, you may have to consider |
| If you are busy with the day to day running of a | | | | other options such as cost cutting. |
| business, it is all too easy to overlook the signs which | | | | If any of the situations highlighted above are |
| would indicate that the company is at risk of trading | | | | identified, it does not necessarily mean that your |
| while insolvent. However, this situation can be | | | | business is heading for failure. Once the underlying |
| avoided if you ensure that you have good and | | | | reasons for the problems are investigated and |
| regular information about specific areas of your | | | | understood, it may be possible to resolve them |
| business. I would suggest that during these difficult | | | | quickly through a change in business processes. If this |
| economic times, directors and senior managers take | | | | is not possible and the situation is more serious, then |
| special notice in the following areas: | | | | it is important to act quickly. |
| 1. Make sure that you receive regular reports | | | | If you have been putting off difficult business |
| regarding the status of the company’s current | | | | decisions such as a redundancy programme to reduce |
| account. If the account is permanently at the limit of | | | | cost, then a realistic view must be taken as to when |
| the overdraft then urgent action needs to be taken | | | | this should be implemented. However, before making |
| to improve cash flow. | | | | radical change to your business, my suggestion would |
| 2. Is the business holding on for one more sale, | | | | be to first take advice from a business advisor with |
| contract or big customer to solve the cash flow | | | | specialist insolvency knowledge. There may be |
| problem? In the current climate, you must realistically | | | | different ways of looking at and resolving the |
| forecast the possibility that this event will not happen. | | | | problem which you had not thought about or were |
| Give yourself realistic deadlines after which alternative | | | | not aware of which may better safeguard your |
| action must be taken. | | | | business for the long term. |