There can be little doubt that trading conditions in 2022 are likely to be harder for numerous different business models than they have been for some time. For one thing, British businesses face the unique situation that has followed the UK’s recent departure from the European Union. Whatever you think about the politics of that decision, it is only now that some businesses are starting to feel pressured by European supply chains, the lack of overseas employees and red tape with exports. Added to this, interest rates have risen and will in all likelihood go up again as inflation starts to bite.
With so many costs to doing business, some firms will inevitably fail. What can you do to avoid going bankrupt in the latter half of the year?
Prioritise Debt Management
Most businesses have debt in some form. Perhaps they owe for a start-up loan or a bounce back loan, for instance? Maybe they’ve taken out a mortgage on their business premises. There again, many smaller enterprises may have borrowed to invest in new equipment or tooling. Even if you don’t have a business loan as such, it is likely you will owe your suppliers something and be expected to pay within 28 days of an invoice. As such, you need to make sure you are on top of all your company’s debts. If not, the situation could get out of control even if interest rates were to rise by as little as one per cent. Talk to Salient Insolvency if you want help to renegotiate the terms of your business debt, something many creditors will do if they think the alternative is your firm defaulting by going into bankruptcy proceedings.
Focus on Credit Control
The flip side of managing your debts with suppliers is ensuring you are paid on time for all of the goods and services you provide. Although writing off bad debt is an option, most firms will not find this sustainable if they’re also managing their own debt. What you want to avoid at all costs is a debtor going bankrupt themselves through insolvency. If so, you can only reasonably expect to be paid a proportion of your expected payment, if anything, depending on the circumstances. Remember that the difference between having a cash flow problem and structural insolvency is often down to how frequently your customers pay you.
Sell Non-Essential Assets
If cash flow is a problem – even a temporary one – then you should also look into the saleable value of your business’ assets. Company cars, stock and premises all have a value that you can cash in on so long as you own them, of course. Bear in mind that selling business assets is often inconvenient. Nevertheless, in an era of inflation, you might get more for them than you had imagined. Despite the undoubted problems this course of action will entail, selling assets to survive is often preferable to going out of business entirely, in which case you may end up losing them all anyway.