Anyone running their own business knows that one of the main challenges is in how to manage your cash flow. Money received for supplying goods or services should ideally be used to pay creditors as soon as possible, but in reality this isn’t the norm.
Source: Insolvency Service Total individual insolvencies for Q1 2009 onwards include Debt Relief Orders, which came into force on 6 April 2009
Juggling the money coming in with the payments going out is seemingly a never-ending battle and in lean times, when business income is low, making payments to creditors can be difficult. If a creditor makes repeated demands for payment over time, and you can’t find the resources to pay up, then your company could ultimately reach a position of insolvency.
If you are worried that your business isn’t performing as well as it should, and if you think that insolvency could be a very real risk that you’re facing then you should contact Payplan as soon as possible. The very worst thing you can do is to do nothing. Who you contact at Payplan may well depend on your type of business, so check this page below to get the right free help as soon as possible.
How insolvency affects small businesses
If you're a sole trader or a partner in a partnership then the insolvency of your business could potentially lead to your bankruptcy which may mean that your business won’t continue trading. When running a business that's defined as being a sole trader or unlimited partnership, you have an unlimited liability towards the debts that your business accrues. That means you have a personal liability for the debts of your business, and in a worst case scenario you risk having to sell your personal assets in order to pay your creditors.
If you think your small business could be in a position of risk of insolvency then you need to act now. It’s possible that with good debt advice, insolvency could be avoided and trading could continue.
What to do if you’re worried about small business insolvency?
Our Small Business department is expert in finding business debt solutions to suit small businesses. We will look at your business situation from every angle to try and find a workable debt solution that will allow you to continue to trade.
We understand that prolonged cashflow problems can result in insolvency, and we can assure you of a sympathetic response upon contacting us free on 0800 280 2816. We can offer free debt advice and then a debt solution that could help get you debt-free quicker.
How insolvency affects limited companies
Insolvency can affect you differently if you're a director of a limited company. In legal terms, you have limited liability for the company's debts, which usually means that your personal assets will not be required to be sold in order to repay the company's creditors in the case of company unless you have agreed to personally guarantee any of the company's debts. But if you, as a director, allow the company to continue trading when it's insolvent with no hope of repaying creditors, then you may also be deemed personally liable for some of the company debts.
But that's not all. If, the company enters administration (insolvent liquidation, or administrative receivership), the administrator (or liquidator or receiver) who is appointed to your case will review your actions as a director. If you're adjudged to have behaved as a director in a negligent manner, then this may result in you being unable to act as a company director for up to 15 years.
What to do if you're worried about limited company insolvency?
If you're worried that your limited company could be facing insolvency then contact Ken Marland at Payplan (telephone 01476 584584 or use our Debt Help Form) for a free consultation and business review.
If you are struggling with business debt, you're worried your company could be heading towards insolvency, and you're wondering if you should continue to trade, don't delay in contacting us. Our free business review will summarise the challenges facing you and your company, and we'll provide complete details of all options available to you.
We can help deal with the problems directors need to address in the face of insolvency, with debt solutions that include:
- Company voluntary arrangement - Similar to an Individual Voluntary Arrangement, where creditors can agree to write off a proportion of your debt, but modified for a business and where a repayment plan of reduced payments is agreed with creditors while allowing the business to keep trading.
- Administration order - An administration order is an insolvency procedure designed to protect a company from its creditors so that it can continue to trade, which will normally provide a better outcome for creditors than a liquidation.
- Liquidation - A company is wound up, the company assets are sold in order to pay the creditors, and any remaining money after the fees and expenses of the liquidation is divided up among the company shareholders.
- Informal arrangement - simply a repayment agreement you make with your creditors without using a third party.
Insolvency - what can you do next?
As a next step, contact Payplan for free & immediate advice on insolvency and any debt solutions appropriate to your needs.
Small businesses (sole trader or partnership); for immediate and free insolvency advice please call Payplan free on 0800 280 2816 or use our Debt Help Form to submit your debt problem online.
Limited companies; for immediate and free insolvency advice please contact Ken Marland at Payplan (telephone 01476 584584 or use our Debt Help Form) for a free consultation and business review.
Unlike so many other debt management companies, here at Payplan we don't charge any upfront fees for debt solutions such as Individual Voluntary Arrangements and Debt Management Plans so you don't have to worry about paying any fees you might normally associate with an IVA or a Debt Management Plan. Instead we receive our income primarily from the credit industry. That is, your creditors recognise that our debt solutions are a sustainable and realistic strategy in getting you debt-free, and agree to arrangements that will typically complete with no fees charged to you.