The Warning Signs of Limited Company Insolvency


Perhaps it’s a sign of our economic times that having company debt is now a fairly normal part of owning or managing a business. A small amount of debt is perfectly normal and managing the debt in the form of paying out monthly bills and ensuring that cash flow is managed properly is something that business owners and managing directors do or sign off on all year long. That said, when your balance sheet becomes unmanageable you could run into issues with creditors and eventually legal issues as well. Digging into your company’s financial statements may not seem like something that any business owner or company director wants to do when they know things are not moving in the right direction but it is essential none the less if your goal is to save your business and turn things around.

Initial Warning Signs

The initial warning signs of potential insolvency are different for each company. Getting behind on a few bills here and there may not mean the proverbial end is near but lacking the cash flow to pay your operating expenses more than a few times a year should send those red flags waving. We aren’t talking about forgetting to pay a bill here or there-we are talking about knowing that the bill is due and not being able to pay it because you don’t have enough money in your business bank account. Worse yet, you may have to take money from payroll, be behind on VAT contributions, or employee PAYE bucket to pay your operating expenses. These are all initial warning signs that the Limited Company is risking insolvency. Another issue here early on is that many business owners know that they are having issues but they fail to admit to themselves that there is any grave danger.

Creditor Calls

Creditor pressure can be one of the most stressful things a business owner can experience. By the time they’re contacting you, you have probably reached 30 days past due on your business bills and or other obligations. In these scenarios, invoice finance can be an option, because it allows you to keep the cash flow moving during this critical period. But if even that fails to stem the creditors, it is time to seek professional help in the form of debt advice or help from a debt resolution firm. These firms can work on your behalf and negotiate deals with your creditors. In some cases, the debt resolution firms can get the creditors to reduce your overall debt load or perhaps even reduce your interest rate so that you can get back on track with payments. A debt advice firm can also assist you with company rescue options, and as a last resort, assistance with the company liquidation process. If you are experiencing any of these warning signs there are still options available to you. Take advantage of them while you still can.


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