Find out more about the higher number of insolvencies over the last year and how to protect yourself against that happening.
Statistics tell us that there have been double the amount of company insolvencies in the last year. A large reason for this happening is the extra companies that have found themselves unable to continue post-covid, or who directly went under because of the pandemic and the insolvency was delayed.
Moving forward, the economy isn’t exactly supporting the birth and growth of companies, things are very up and down and most businesses, especially small to medium businesses, are having to be really creative to ensure they survive. If that sounds like you, the following tips can help your business avoid insolvency:
Avoid Delayed Payments
A lot of businesses go under because they are owed money, but are waiting for it to be paid. Make sure you invoice quickly and chase up late payments so you have good cash flow.
Accept Orders You Are Sure You Can Fulfill
Ensure you don’t over promise and underdeliver by only fulfilling orders you are sure you can do. This is particularly important when you’re small and your reputation is still fragile.
It can sometimes be the case that you’re putting out one fire and another one starts, and before you know it, you’re only putting out fires but the business never grows. Be sure to continue to innovate and think of the future with business planning and ways to expand and grow, so you don’t end up stagnant.
Stay On Top Of Debt
Never ignore those you are in debt to, and consistently discuss payment dates and credit limits with your creditors. The more you communicate the more chance you have of ensuring negotiations can happen when you struggle with payments.
Reduce Your Overheads
Try choosing freelancers instead of paid staff, invest in local self-storage instead of an office or warehouse, shop around for cheaper computer software, office equipment, vehicles – whatever you need to trim those overheads down. This is especially true if you look at the balance sheet and see that your overheads are largely strangling your finances. It can take time to reduce the costs but the money saved can be quite significant.
Understand The Warning Signs
There are insolvency warning signs to look for like making less money, struggling to pay bills you usually can pay, and having more debt than asset value. Understanding the warning signs means you have the chance to turn things around, ignoring the warning signs means things can get out of control and you can quickly find yourself beyond resolution.
Seek Professional Advice
Sometimes it can help to get professional advice on your situation if things are a little complex and you are not yet ready to give up. Expert financial advisors may be able to suggest different ways to turn things around that you hadn’t thought of, or advise against any ill-thought-out plans you may already have.
You Can Stay Afloat
By staying aware of your situation, and utilising affordable, flexible services like local self storage, you can hopefully avoid insolvency and stay afloat during difficult economical times.