As a small boutique we deal with a number of suppliers who extend products to us on a line of credit. In the past we had no problem keeping up with our obligations because we had a high sales volume, but lately online competition has hurt our industry so business is slow, and our debts have skyrocketed in the past year. I get the feeling that this business is not far from going bankrupt if I can’t find a way to spark growth somehow. Our business plan was profitable for almost a decade before this last year. A few wrong loan decisions and now we’re in trouble. I really don’t want this family business to come to an end, but what can I do to stop it?
The answer to that will depend on which route you want to take. You apparently believe in the ability of your business model and you want to pursue continuity, so a formal procedure like a company voluntary arrangement, CVA, may suit you perfectly. You mentioned that a few wrong loan decisions put you in a bind. A CVA might be able to help you renegotiate the terms of those loans so that you’ll have enough cash left over at the end of each month to make a profit and invest.
Without proper marketing strategies it may be difficult to help you beat online competition in a local market, but we can minimise the pressure exerted on your company due to debts and financial obligations. If you’re trying to restructure the company to be more competitive you’re going to need funds to invest. By reducing monthly payment amounts and extending the length of the loan agreement a CVA can give you the extra capital needed to invest in marketing methods that you couldn’t afford previously. More importantly, it will keep creditors from winding up the business and sending it into liquidation prematurely.
If a CVA can’t be arranged and the company is closer to its demise than thought, it may be time to enter into administration, during which an insolvency practitioner assumes control of the business operations. After assessing your situation more thoroughly we can go over other option as well, such as asset financing, invoice discounting, and factoring.
12th December 2018
Small and medium-sized enterprises (SMEs) across the UK are paying increasingly large sums of money to collect amounts owed to them by their clients and customers.Read More
4th December 2018
The number of independent retailers who closed down outlets during the first half of this year reached a record high level for any comparable period.Read More