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Posts Tagged ‘business debt’

Credit easing and the possibility of recession

Monday, November 28th, 2011

It is impossible to tell what the future holds for the struggling British economy. The Chancellor George Osborne has announced a policy of credit easing. In a few months, this measure might begin to make a positive difference to the situation. Other measures like the freeze in council tax might permit consumers to spend more. However, much depends on the implementation of the credit easing plan and on external economic conditions.

At Cooper Matthews, we know just how hard the economic climate is out there. Whether or not the credit easing is well thought out, it is quite possible that a double-dip recession may occur. The growth forecasts have been revised downwards on several occasions and the international economy is in an awkward patch. It has become routine to maintain that there is a leadership deficit affecting the United States, the Euro area and Japan.

In these difficult conditions, the number of distressed companies is likely to increase, whether or not the economy officially enters recession again. Business debt is seldom caused by the actions of firms because it normally reflects external conditions. However, if a company is suffering from severe company debt problems it does not mean that it should give up. If its directors act swiftly and appropriately the company’s future may well be saved.

A professional insolvency practitioner has the experience and expertise to assist a company in considerable difficulty. A company cash flow problem need not mean that there are not diverse solutions out there to be explored and implemented.

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An example of how to handle business debt

Tuesday, November 22nd, 2011

Amid all the headlines about worrying economic news, there has been a story which has shown how swift, correct decision-making can help firms which are suffering in current economic conditions. Alexon, a fashion group which employs around 2700 staff, has been taken over by a private equity firm.

At Cooper Matthews we know that many companies on the brink of collapse have the capacity to be efficient concerns if the right measures are adopted. Struggling businesses can have happier futures if they get the chance they deserve.

Alexon had been struggling for over sixth months. It had issued three warnings with regard to profit levels in the period before the takeover. Its business financial difficulty was such that it would have been unable to afford the rent due for its shops. As the end of September neared, its shares were finally suspended. The severity of its problems was underlined by the fact that it had debts which were almost 9 million pounds higher than its market worth of around 4 million pounds.

The company was saved using pre-pack administration. This method will not be appropriate for every struggling organisation – when trying to deal with debts accumulated through business activity, ‘one size does not fit all.’ Experienced practitioners must look at each company on a case-by-case basis.

Nobody can predict what the future holds for Alexon. This is true for every enterprise which receives a second chance. Nonetheless, the example of Alexon does indicate how foolish giving up actually is.

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Major weaknesses in the European economy

Sunday, November 13th, 2011

Since the financial crisis has entered a new chapter, it is clear that there will be no swift return to business as usual even if things go well. The sovereign debt crisis in the Euro area has taken a dangerous turn. Not only is there potential for a fresh banking crisis, but there is also the fact that the poorer states do not appear to be coping well with addressing their own sovereign debt problems independently.

At Cooper Matthews, we recognise that British firms are not insulated from international problems. The Euro area is obviously a major market for British exports. There is a lack of demand for British goods and services at home and abroad. The widespread economic gloom is affecting a diversity of companies, not just those who look to export to mainland Europe. A new wave of the banking crisis would have a destabilising and unpredictable impact.

In a context like this, it is not unusual for a business to acquire debts. With lots of organisations shedding jobs, a variety of small companies are finding it hard to sell their products or services. Business debt can rise swiftly in times like these.

Even though a business cash flow problem may be serious, it is important for everyone concerned to remain as positive as possible. Advice from experts should be sought without delay. It is vital to remember that the future is uncertain and that there is nothing inevitable about company liquidation.

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UK not keen on European tax on financial transactions

Monday, November 7th, 2011

In September, the Bank of England made clear that British banks should take any possible steps to strengthen their position in terms of capital. It also asked the Treasury to ensure that the City maintained as much autonomy as feasible in these dangerous economic times. However, as part of the European Commission’s efforts to push for solutions to the sovereign debt crisis within the Euro zone, it has recommended that there should be a Europe-wide tax on financial transactions. Those responsible for the British economy do not wish to sign up to anything which might adversely affect the international competitiveness of the City.

At Cooper Matthews we are conscious of the fact that many businesses have become virtual bystanders as economic problems are being addressed at a higher level. The trouble is that there has been no coherence in the response of those in charge of the European economy. Hence plenty of good companies are finding this prolonged period of crisis to be a very difficult trading context.

When consumer spending is depressed due to a combination of household debt and high inflation, many enterprises are seeing business debt rise. Sometimes the level of debt is below the value of the assets of the company, but this is not always the case. It is necessary to get an expert to disentangle the financial affairs involved.

It is not the case that a business cash flow problem inevitably spells disaster. In some circumstances, a phoenix business can be formed to make use of the same assets and staff to make profits in the future.

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Untangling a complex web takes skill

Sunday, October 30th, 2011

Personal debt can be difficult to deal with. Many individuals are obliged to seek help from trained debt advisors when they try to get their financial affairs in order. However, they can use free services and the issues they get help with do not generally get as complicated as those affecting firms with financial difficulties. Business debt analysis has to cope with a wider range of problems and the level of complexity is frequently high.

At Cooper Matthews we recognise the complexity of debts accrued by running businesses. We have the necessary expertise to help companies which find themselves in the mire.

It is of critical importance that distressed organisations seek advice promptly. Permitting complex financial arrangements to develop in an unhealthy direction is not a wise move. Creditors can seek to impose a winding up order even if the money owed is not all that considerable. To avoid a potentially disastrous winding up petition, employing a firm which uses qualified sector-specialist insolvency practitioners is an astute step to take.

Debts which firms owe can be complicated by the way in which the money was raised. Some debts might have property attached to them and a potential repossession must be stopped from happening. Other debt may be complex because it is owed to a diversity of firms.

Businesses can be in debt because of late payments or because they have not made enough capital to cover costs. It is also the case that not every company has the assets to cover a debt while others have; it can be tricky to work this out.

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Business debt in uncertain economic times

Monday, October 24th, 2011

The amount of profit a company can make is dependent on a variety of disparate factors. It is always misleading to see business success as simply the consequence of things occurring within the firm. In times of economic turbulence, the truth that business progress is often connected with external conditions is underlined.

At Cooper Matthews, we appreciate that the UK economy has endured a difficult summer. Confidence has taken a knock and an unstable international economic situation has added to the gloom. It is not surprising that many small firms have found themselves struggling through no fault of their own.

A company cash flow problem can arise in a diversity of ways. When times are good, it might be the consequence of the illness of an important manager. During periods of low growth, it might be that a big supplier goes into administration. Sometimes, a company financial difficulty develops simply because consumers are spending less than normal.

In recent months, many British consumers have been either unable or unwilling to buy large items. Inflation has been higher than the average increase in wages, while some people are concerned about potential unemployment. Those with savings may have been alarmed by the volatility of the stock market.

Having a good appreciation of the fact that being in debt is not often due to personal shortcomings enables directors to seek specialist help and make progress in the correct frame of mind. If the internal workings of firms were generally responsible, there would be a much looser relationship between business failures and the trajectory of the wider economy.

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Serious business debt need not mean the end

Friday, October 21st, 2011

When a business has accumulated a lot of debt it is easy to let gloom dominate thinking. However, even if a business is struggling to deal with its debts and its prospects are poor there remain options. As long as specialist advice is sought, debts need not necessarily spell the end of a business which has some possibility of better prospects down the track.

At Cooper Matthews we have the experience and expertise which can make a difference to firms which are going through exceptionally tough times. A distressed company might have to close, but sometimes a new company which does similar things can take its place. A director of the old company might be able to be a director in the new one, as long as they have not become bankrupt and as long as relevant regulations are respected.

The regulations governing companies which imitate a phoenix have been tightened in 2011. This was to ensure that creditors received fair treatment. There had been worries that assets could be passed from the old company to the new phoenixing company at below an appropriate price. A regulation has been introduced which means that it is only possible to make a phoenix business after a three day notice period has elapsed. Administrators must also give an assurance that assets were not sold too cheaply.

Adhering to the regulations independently is beyond the capacity of distressed companies. They need the assistance of specialists who can guide them through the complex process safely.

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Disentangling complex financial webs

Saturday, October 15th, 2011

Even quite a small company can engage in quite complex financial deals. That is one reason why business debt services operate from a more difficult starting point that those services which assist individuals with debt problems. Furthermore, company directors can also have personal debt issues, if they have got loans secured on their property. It all means that there can be a lot of technical work for an insolvency specialist to perform.

At Cooper Matthews we are well accustomed to coping with complexity. This means that there is no need for a firm to panic if its affairs are somewhat muddled. Moreover, our expertise means that we can work out the best ways of protecting directors and the organisation from suboptimal outcomes.

A business cash flow problem can arise from a diversity of sources. It might develop because other firms make late payments. It could be the consequence of the termination of a large contract. It could be that a director has a protracted period of enforced absence. Or it might be that a big supplier goes to the wall. However, in many cases problems stem from more than one thing going wrong at once.

Working out the best way to address a company cash flow problem can be a time-consuming and painstaking activity. It takes patience, experience and skill. If a business is going through a very tough period it is most likely to have a better future if it seeks out specialist assistance from an organisation with the right blend of qualities.

business debt services, business cash flow problem, company cash flow problem

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A summer of stagnation

Wednesday, October 12th, 2011

A recent survey by Markit has indicated that the British service sector had a very poor August. Its performance slowed at a rate not witnessed for about a decade. Meanwhile, figures compiled by the British Retail Consortium suggested that there has been a 0.6 decline in retail sales. Growth forecasts have been trimmed by a range of institutions including the IMF.

At Cooper Matthews we understand that trading conditions are very difficult at the moment. Understanding the context enables us to deliver advice and solutions which have the capacity to deliver the goods.

While economists are divided about the best way forward, many UK companies have been having a very difficult time. Even if a further round of quantitative easing is introduced, it will take time to have a positive effect. Nor would any reduction in taxation be likely to have a significant stimulating effect in the short term. Those companies which have racked up business debt should know they are far from alone.

Business financial problems are a bit like those affecting the economy as a whole in that they are not amenable to quick fixes. Nonetheless, company debt problems can be dealt with efficiently if one uses an experienced insolvency practitioner. They have the capacity to analyse the situation and can help a firm with the solution that is most appropriate to its needs.

Part of keeping afloat in difficult times comes down to attitude. Perceiving that there are many other good companies in similarly awkward spots can help in the cultivation of a determined mindset.

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UK growth is likely to remain weak

Sunday, October 9th, 2011

The Organisation of Economic Cooperation and Development (OECD) are usually upbeat about the prospects of its member economies. However, they have recently predicted negative growth in Germany and no growth in Japan. With regard to the British economy, they have suggested that outright recession will be avoided in the next few months. Nonetheless, they make clear that the lacklustre recovery is likely to continue to grind on in its unimpressive way.

At Cooper Matthews we appreciate that the next few months are likely to be tough for a diversity of small and medium-sized businesses. Obviously they do not have the protective resources of large corporations and find it harder to get credit from the banks. However, if a small concern does build up significant business debt in these terms it is not necessarily the end of the road.

A business cash flow problem does not mean that a company cannot hope to be a viable concern in the future. It is a sign that something has gone wrong, but it is not evidence that the failure is permanent. The difficulty may have arisen in a plethora of diverse ways. If a calm head is retained and the correct assistance sought, the unfortunate situation may well be sorted out and creditors appeased.

Any solution has to fit the nature of the circumstances in which the distressed business is in. Analysis is necessary to explore the various alternatives. Sometimes, there are more options than others. In certain cases, a time to pay arrangement will do the trick.

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