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The reason that corporate debt can feel like such a daunting topic of discussion is that its relationship to business accounting can make it seem very complicated, and the consequences of poor corporate debt management can be devastating for all involved – including employees. However, contrary to that perception, there are five clear and important steps to the management of business debt situations, which can bring clarity and control back to a difficult and confusing scenario. 
 
A pro-active approach 
 
Corporate debt becomes a problem for businesses when business leadership takes its eye off the ball. Vigilance, coupled with stringent accounting processes, ensures a pro-active approach that allows for the time and space to make fully informed decisions at every stage. The five steps are as follows: 
 
1. Develop a full understanding of the situation and prioritise 
 
It is impossible to deal with a situation in a satisfactory way if the situation in question is not fully understood. In the case of corporate debt, it is essential to collate and analyse all information at every level of granularity. This data – also drawn from forecasting and cash flow management processes - can then be used to effectively prioritise all outgoings. These will include: 
 
Payroll 
Insurances 
Supplier invoices 
Capital expenses and utility costs 
Debt repayments 
 
2. Reduce costs 
 
When we talk about cost reduction for businesses, one of the first elements that springs to mind is often the workforce. Cutbacks evoke the idea of redundancies, and this can cause a great deal of stress and tension. In fact, reducing business costs should be undertaken in much more strategic and considered way. It is essential that any cost reduction measure is balanced against the long-term projection and plan for the company. For example, if the existing workforce is necessary for planned and otherwise achievable growth, but operating costs can be reduced in the long-term through investment in remote working infrastructure, then this is strategic re-structuring that can help with the management of corporate debt. 
 
3. Improve cash flow 
 
The reduction of costs, or outgoing funds, can certainly help to improve cash flow, but there are other cash flow strategies that can create substantial financial benefits. Firstly, it is important to thoroughly review pricing structures. Adjusting your prices and profit margins on goods and services can make a notable difference to income. This could mean renegotiating with suppliers or undertaking an overhaul of sourcing processes. In connection with this process, a comprehensive stock-take can also lead to savings in the short-term. Secondly, a detailed analysis of contract performance can yield excellent results in terms of cash flow improvement. This can include the renegotiation of payment dates, as well as an adjustment to the conditions expected for termination or renewal. 
 
4. Communicate 
 
When a business is dealing with a corporate debt problem, communication can be daunting. Being open and transparent about debt issues can seem somewhat counter-intuitive, and a keenness to publicly project commercial strength and viability for the reassurance of customers can seem paramount. However, it is essential to maintain honest communication with both creditors and shareholders with regard to the evolving financial situation of the business. Doing so helps to ensure that options such as Company Voluntary Arrangements (CVAs) are more likely to remain available, and that opportunities to secure finance and investment are highlighted at the earliest possible stage. 
 
5. Engage the services of licensed Insolvency Practitioners 
 
The idea of engaging the services of licensed Insolvency Practitioners may seem like a last resort, when all else has failed and bankruptcy is anticipated, but this does not need to be the case. Insolvency Practitioners are qualified professionals who are able to provide advice and guidance from the earliest stage of corporate debt becoming a problem. By engaging expert services as soon as financial difficulty is identified, a business can develop a more accurate understanding of its position and therefore make decisions that are fully informed. With professional guidance, those decisions can relate to a number of different options, not all of which result in the worst case scenario. In some cases, it can be possible to ‘rescue’ the company – but only if action is taken early enough. 
 
The Smith & Barnes solution 
 
The team at Smith & Barnes Insolvency Practitioners are highly experienced professionals in the field of insolvency management. This expertise includes early interventions and the provision of advice and guidance that is tailored to the specific needs of the enterprise. With the right amount of time and notice, Smith & Barnes Insolvency Practitioners can help businesses to maximise opportunity to achieve the very best and preferred outcomes for the organisation. 
 
Businesses are that struggling with corporate debt are more likely to be Small and Medium Enterprises (SMEs), representing not only the livelihoods of local workers, but also the years of commitment and financial investment of hard working entrepreneurs. These pressures make the spectre of mounting corporate debt highly stressful. With this in mind, the Smith & Barnes team work to develop a thorough understanding of the finances in question, on a low cost, fixed fee basis. Focused on the delivery of quick and efficient customer service, Smith & Barnes offers a range of options to businesses in difficulty. 
 
These options include business closure processes, such as Company Dissolution, Compulsory Liquidation, and Creditors Voluntary Liquidation. Business rescue options are also available, however, including Administration, and Company Voluntary Arrangements. Drawing upon years of specialist expertise, the Smith & Barnes team can work through the financial position of your business and advise on the most appropriate option. This guidance is delivered in a timely and simple way in order to bring clarity and direction to what may be a difficult and confusing situation. All guidance is tailored to the needs and issues of the business in question, so contact Smith & Barnes Insolvency Practitioners today to determine your best course of action and put your business on a path to corporate debt resolution. 
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