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Archive for January, 2011

What to do when business debt becomes overwhelming

Sunday, January 30th, 2011

Corporate insolvency is a serious state of affairs for a business director as it often involves bankruptcy on a personal as well as a corporate level. It is difficult, sometimes, to know which way to turn for help. The first step should be to get expert advice to help you deal with the problem. We at Cooper Matthews have many years experience of examining business debt and devising solutions.

There is also some good news in that the government is keen to support small to medium sized businesses, and as such the Department for Business, Innovation and Skills has launched policies to improve access to finance for this sector and help ward off corporate insolvency.

The Enterprise Finance Guarantee will make £2 billion available over the next four years to businesses that have no collateral or credit history.  £200 million in equity investments is promised to those with the highest growth potential over the next four years.  £1.5 billion is dedicated to the Business Growth Fund and a new lending code with the banks is being sought.

This should be good news for the 4.8 million UK small to medium businesses, which the government believes are at the heart of the economy. They provide 60% of private sector jobs and over half the turnover. Unfortunately, of the estimated 67% who are eager to expand their workforce, only 20% achieve this every year.

We at Cooper Matthews are wholly supportive of the government’s efforts but we are also realists. Our services are designed to support the numbers of businesses who find themselves in difficulty.

Business bankruptcy; corporate insolvency;

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Company debt rescue: the professional approach

Thursday, January 27th, 2011

If you are in the position of needing advice about a debt management plan or a company voluntary arrangement, you need to be certain of the quality of any advice you will be given. We at Cooper Matthews have years of experience in this field and only use properly licensed partners and insolvency practitioners.

The 1986 Insolvency Act facilitated the setting up of recognised membership bodies to authorise and licence insolvency practitioners. The Insolvency Practitioners Association is the only recognised body dealing solely with insolvency and we use them to ensure that any business financial trouble is dealt with in a legal, professional and efficient manner.

There are many different solutions to business debt, each dependent upon the unique circumstances of the company in trouble. Some also involve considerable personal debt, as the directors have contributed a great deal of their own assets to the business. This can complicate the situation but we have the experts at our disposal to sort it out.

For example, if business voluntary arrangement advice is given and you wish to set up an agreement then this must be done by a licensed insolvency practitioner in conjunction with the company’s directors. The insolvency practitioner is appointed Nominee and presents the agreement to the creditors at a creditors meeting. If this is accepted it becomes a legally binding agreement which prevents the company from going into liquidation and provides a return for the creditors. This is a fair result for everyone, making the best of a difficult situation.

Company debt rescue; Business voluntary arrangement advice; company voluntary arrangement; business financial trouble; debt management plan

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Understanding cash flow as part of business debt services

Monday, January 24th, 2011

A common business problem is the lack of understanding of cash flow and its purpose. Too often, the appearance of a business cash flow problem is the only time that directors start to appreciate its value and ask for help. Here are a few facts about cash flow to help put you in the picture:

Cash flow is an indicator of the overall health and performance of a company; it is not a measure of the profitability of the business. How a company spends its money is cash outflow and how it gets its money is cash inflow.

A cash flow statement showing both these items over a specific period of time is an indicator of the liquidity of the company and is a valuable tool for any debt management plan. Liquidity is not the same as profitability; it is a measure over time and is useful in determining business viability.

Cash flow takes into account the cost of operations, investment and financing. Operations are the core activity of the business, the part that generates the income. Investment is the amount spent on items such as equipment, buildings, and fixed assets. Financing reflects the borrowing and loan repayments that have an impact on cash flow.

Director finance advice in this area can target cash flow areas that need attention when there is a company cash flow problem, and we at Cooper Matthews are advice experts in the field. We offer comprehensive business debt services to small and medium sized businesses.

Debt management plan; business cash flow problem; company cash flow problem; director finance advice

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Business debt analysis according to Mr. Micawber

Friday, January 21st, 2011

Mr. Micawber, in Charles Dickens’ novel David Copperfield, had a firm grasp of business debt analysis when he said:

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

He had been in prison for debt, but he was an honest, if poor man, eventually exposing the wrong-doings of another character. He was continually expecting something to “turn up.” At the end of the novel he emigrated to Australia with his family and becomes a successful banker. There are lessons here for all of us to avoid the misery of bankruptcy.

It is surprising how many directors try to hide their heads in the sand when faced with possible company insolvency, hoping that something will turn up to save them. That something should be the realisation that help is needed to sort out the debt and carry on the business if possible.

We at Cooper Matthews have plenty of experience in these areas and our experts will be able to guide and advise you through any business financial trouble. The last thing anyone wants is a company winding up, but if you delay too long that is more likely to be your fate.

Mr. Micawber always had a crystal clear perception of his situation and short-comings, yet he never let this get him down or tempt him into wrong-doing. As a company director, you could do far worse than to choose Micawber as a role model.

Business financial trouble; company winding up; company insolvency

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Business debt transforms the economy

Tuesday, January 18th, 2011

The Office of National Statistics states that the current British government debt is £952.8 billion. Government debt is the amount owed to the private sector and purchasers of UK gilts. Compared to this unimaginably large sum your business creditor problems may seem small in comparison, but don’t neglect to tackle your company financial difficulty. We at Cooper Matthews would advise that you take advice as soon as you are aware that it is becoming a problem.

Business debt advice from an experienced company will help you to navigate successfully through the current crisis. The knock on effect of not tackling your debts is that your creditors will find themselves in difficulties and a spiral of debt will follow. In a simplistic way, this is what has happened on a global scale. Governments and large corporations are unable to honour their debts and this has ultimately filtered down to medium and small business. The banks are no longer lending as freely as in the past, so cash flow has dried up and loans are being called in.

With prudent advice, and by making sensible economic choices, it is possible for businesses to continue trading. Consolidating debts and arranging repayment on an affordable scale often means that creditors are guaranteed a return of their money. Suppliers will usually be keen to continue doing business with the company, enabling employees to keep their jobs. If people are kept in work then they have a disposable income which they are likely to use to boost the local and national economy.

Business creditor problems; business debt advice; company financial difficulty

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Winding up orders and business debt

Saturday, January 15th, 2011

Business debt should always be taken seriously, but sometimes this is not the case. Some companies delay payment, promise payment but do not deliver, or issue cheques that bounce. Often the creditor loses trust in the company and despairs of ever receiving payment. The only option open to them, especially if the company has ignored the judgement of the small claims court, is to take out a winding up petition. Creditors who are owed £750 or more may do this by applying to the high court for the winding up petition and process to be implemented.

If a company director receives a winding up petition then corporate insolvency is on the horizon if swift action is not taken. The process that follows will lead to a winding up order, which will make the director personally liable for the company’s debts. The high court will grant a hearing of the petition at a future date. If this is ignored by the company then the judge will issue the winding up order. The implications of this order are very serious because the company now cannot go into voluntary liquidation, nor can it or its assets be sold.

This is not a situation that any self-respecting business person wishes to find themselves in, and can easily be avoided by taking sound advice from experienced solicitors such as ourselves at Cooper Matthews, who specialise in the area of business insolvency. The sooner help is sought then the sooner financial difficulties can be amicably resolved.

business debt; winding up petition; corporate insolvency; winding up order

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Business debt analysis makes sense in difficult times

Wednesday, January 12th, 2011

Small to medium sized companies are often short of expert advice when times become difficult and cash flow seems to disappear. Many directors leave it too late before consulting experts such as ourselves in the field of business debt analysis. We can relieve your stress and guide you through processes that you may not have considered, for example a company voluntary arrangement, often abbreviated to CVA.

In a nutshell, a company voluntary arrangement allows a business with financial problems to restructure the repayment of its liabilities over a two to four year period, usually in monthly repayments. Once the restructuring is complete, any monies generated can be used as working capital, rather than towards repayment of the debts. The restructuring is legally binding under the 1986 Insolvency Act, with the directors keeping control of the company and creditors knowing how much, and when, repayments will be made. A company voluntary arrangement does require that 75% of the creditors vote in favour, in which case this arrangement is binding on all the creditors, no matter how they voted.

This can be a complicated process, requiring detailed business analysis in order to satisfy the stringent requirements of the law, but it is worth doing properly. We at Cooper Matthews will undertake the analysis with you and ensure that the Inland Revenue, VAT and any bank or financial company loans and liabilities are factored in. This leaves the directors free to carry on generating new business, providing employment opportunities, and contributing to the country’s economy.

business debt analysis; company voluntary arrangement; CVA; business financial problems

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How bankruptcy can bring a fresh start

Sunday, January 9th, 2011

No one wants to have to take the final step of bankruptcy, but sometimes this is the only sensible company debt rescue option. It is prudent to be aware of this and to take professional advice as early as possible. We at Cooper Matthews are experienced in business financial problems and will be able to guide you through this difficult time.

It is worthwhile being clear about what business bankruptcy is and what it entails; this way, a director can make plans for the future. Bankruptcy or insolvency occurs when a company can no longer meet its debt obligations. The business is wound up and the creditors may be paid a little of what is owed, depending upon the assets left.

Following this, the directors are bound by strict rules. The bankruptcy usually lasts for one year and all your assets are controlled by the trustee appointed by the court. It is worth emphasising that this is likely to include your home. Until the bankruptcy is discharged you may not start another company without the permission of the court. You may not conduct any business in a name other than the one in which you were declared bankrupt. You cannot obtain more than £250 without disclosing the bankruptcy and you may not hold certain public offices, such as a Justice of the Peace, a Member of Parliament, a chartered accountant or a lawyer.

The public stigma is less nowadays but can still feel difficult to stand, but the advantage is that your debts are cleared, allowing an eventual stress-free fresh start.

company debt rescue; business financial difficulty; business bankruptcy

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Rising from the ashes – a look at “phoenixing”

Thursday, January 6th, 2011

Company debt rescue packages come in many forms, and one that has attracted a lot of attention is “phoenixing”. A phoenix is a new being that rises from the flaming ashes of its former self; quite an apt description when you consider the details. The business term for this is pre pack administration, and at Cooper Matthews we will guide you through each step of this difficult process.

First of all, let’s be clear about what is on offer when looking at this option. Rather than a business going straight into liquidation with the creditors getting nothing, phoenixing ensures that they get something. This is achieved by the directors setting up a new company and then buying the assets of the old company and carrying on trading in the core business. There is then a company winding up order at the best possible price, and all the liabilities and debts with it.

This option is usually only considered viable if the core business is sound but has been debilitated by historic debt and is about to fail. There are strict rules and regulations governing pre pack administration as it is not the automatic right of directors to start a new company. For example, if there have been VAT irregularities then HMRC would not allow the directors to form a new company.

One great advantage is that all the original employees are retained and the new company may even trade from the same premises. Exploring this option more fully with us should be done at the earliest opportunity to ensure a smooth, legally sound transition.

Company debt rescue; phoenixing; pre pack administration

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Decrease in business insolvencies brings hope

Monday, January 3rd, 2011

If there is one sure thing about the recession it’s that there seems to be no end in sight for the foreseeable future, despite talks of recovery. Forecasts from experts and pundits contradict one and other, and it is up to each business director to make up their minds what to do, based on their own industry knowledge. Recent figures indicate that the overall trend of the total monthly figures of businesses that went into liquidation is decreasing when compared to the same period last year.

However, should the worst happen and your company appears to be flagging, then the sensible path is to take advice from a company that specialises in company debt rescue as soon as possible. We at Cooper Matthews have considerable experience in the field of company financial problems, and will take the time to discuss all feasible options with you.

One option may be a debt management plan, particularly if you have taken on personal debts against your business. A debt management plan is an option that is not legally binding but offers a temporary respite until full repayment can be made. It is an agreement with creditors to reduce payments on a debt to fit a monthly budget. The full debt still has to be paid, but the period of repayment has no fixed term.

We can advise and guide your business through this option and the sooner these arrangements are started, the sooner your finances can be turned around.

Company debt rescue

Company financial problems

Debt management plan

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