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My Company Has Cash Flow Problems: What Are My Options for Recovery?

Keith Tully

Written by Keith Tully

Cash flow problems can be defined simply; it’s when debt payments outweigh the money coming in.
 
A firm is insolvent when it becomes unable to meet its financial liabilities and, though this is not necessarily the same as having cash flow problems, there is usually a close connection between the two.
 
Business cash flow problems open the door for a number of other issues which can lead to formal insolvency proceedings unless you seek help from professional insolvency specialists at the earliest opportunity. You’ll need to be honest with yourself and face up to figures in front of you - it may be just a temporary problem that can easily be resolved, or maybe you’ve been in denial and there are serious underlying issues which will take radical steps to rescue the business. Once a company begins experiencing cash flow problems the biggest worry for directors is being faced with a winding up petition by creditors which means your company may potentially be a matter of days from liquidation. 
 
There are several different ways in which cash flow may be improved, such as by increasing income, improving profit margins or by reducing the debt repayments to creditors through negotiations. Therefore, if you're unable to increase income despite your best efforts and you can't afford to pay off your bills and debts, then the only remaining option for rescuing your business from insolvency is to approach your creditors and HMRC with some type of payment plan proposal to begin the route to recovery.
 
Real Business Rescue specialises in dealing with creditors such as HMRC and can negotiate payment plan arrangements on your behalf or look into funding options such as invoice factoring to allow your company more breathing space. Factoring allows you to take a loan against business debts that are owed to you. If outstanding invoices are causing you to operate without adequate cash flow, this could be the best short-term solution for your company.
 
For more information on how to handle cash flow problems and the options available for your company, you can arrange a free consultation with a Real Business Rescue specialist at one of our 35 UK offices or you can call our specific director hotline for immediate and confidential advice from a licensed insolvency practitioner.

Further Reading... 

 

Once a company begins experiencing cash flow problems the biggest worry for directors is being faced with a winding up petition. It may be just a temporary problem that can easily be resolved, but the underlying issues could be serious which will take radical steps to rescue a business. Business cash flow problems open the door for a great number of other issues which can lead to formal insolvency proceedings unless you seek help from professional insolvency specialists at the very first warning signs.

What Is a Cash Flow Problem?

In a nutshell, a cash flow problem is simply when debts outweigh the money coming in. There could be a number of reasons why a business has a deficit in available funds, but usually the sources of cash flow problems can be categorised into three main areas:

  • A surplus of outstanding/uncollected invoices
  • Products/services not moving
  • Poor business model/ineffective management

Real Business Rescue can help to quickly identify where your difficulties lie in order to begin turning around your distressed business. We often find that the issues underlying a cash flow problem are the result of several factors. For example, uncollected invoices could very well be the result of incompetent management! Without a careful analysis of your books, it would be difficult to suggest a viable route to recovery.

How Might a Business Deal with a Cash Flow Problem?

There are several ways in which a business could deal with a cash flow problem but the first thing to keep in mind is that cash flow problems are probably a good indicator that your business is insolvent at the moment. Talk to an insolvency specialist to see how you can quickly make funds available to get up to date with your creditors. The problem arises when your company is insolvent with no thought to how bills will be paid in the future. For this reason, contact an Insolvency Practitioner or insolvency specialist the moment you realize cash flow is a problem. It is our job to keep you out of the courts and in business.

Options We Can Explore

Whether we need to help restructure your business, help you obtain financing or set up a Company Voluntary Arrangement with creditors, there is an answer to your financial worries. Sometimes these matters can be cleared up quite quickly. When advising how to avoid cash flow problems and the consequences of having no working capital, we may suggest invoice factoring if you have a surplus of uncollected debts from your customers. On the other hand, if your company has outmoded products or ineffective management, we may suggest Administration and restructuring to keep the creditors at bay.

Our ultimate goal here at Real Business Rescue is to find a means to help your company survive financial distress. The initial consultation is free, we can get right on the problem and nothing will have a fee attached unless we render a service for you. Cash flow problems don’t need to signal the end of the road for your company. Call us today to see how we can help you turn your current problems around. We are Real Business Rescue experts!

Keith Tully

Author
Keith Tully
Partner

Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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