One of the biggest questions people ask me is what the most common signs of insolvency are that I see from a director’s point of view.
Although a wide subject, I’ve narrowed it down to what I believe are the real kick-starters of most insolvencies. If you start noticing that any of these are affecting your company, it’s probably time for you to seek business debt advice and have a talk with an experienced insolvency practitioner about starting to save your company, rather than waiting for six months instead to have a chat about shutting it down.
5 signs it's time to seek debt advice for your company:
1. You’re using your own money to support the company
This is probably the biggest sign that I know of, and it’s an insolvency classic. If you are a director and are using personal funds to continue trading, whether that’s by using your house as collateral for finance, using your personal credit card to fund business activities or not taking a wage at the end of the month, it’s best to start thinking about getting some real business debt advice.
Involving your own finances is especially risky; if your company does become insolvent, you’ll be highly unlikely to get your money back, and the business ultimately might take you down with it.
2. You’re making payment agreements
If the business is extending its terms with suppliers, increasing creditor days or having to make payment agreements, it’s often a sign that the business might need some breathing room before things get worse.
3. You’ve received letters from HMRC
Unfortunately, HMRC don’t go away - no matter how hard you try to hide from them. The letters will get worse and deeper proceedings will occur if they are ignored. Talk to someone who deals with HMRC daily to explain what the options are.
4. You’re unable to pay your employees’ wages
If your company is unable to pay its employees or you are using your personal finances in order to pay your employees, this is another sure-fire sign that the business is on the path towards insolvency.
It’s important to remain aware of your employees’ rights in an insolvency situation, including redundancy payments, unpaid holiday pay, and more. You can read about this in more detail in this blog.
If you’re worried about what will happen to your employees if your company does become insolvent, take a look at our blog “What will happen to my employees if my company is insolvent?” here.
5. You know the bailiffs by name
If you are on first name terms with bailiffs or have had to research how to stop them entering your premises, it probably means that it’s too late to avoid an insolvency situation. Much like HMRC, even if you turn the lights off and hide under your desk, they’ll still come back. At this point, it’s important to talk to an expert about how to legally protect your assets in such scenarios.
If you’re seeing any of the above signs, then the time to act is now.
The earlier you seek business debt advice from an experienced and reputable insolvency practitioner, the greater the number of options you will have and the more improved your chances of saving your business will be.
McAlister & Co are one of the top licenced insolvency practitioners in the UK, and would be glad to offer you help, support and guidance if you are worried about your business’ debt. Simply contact us here, or request your free consultation below: