There is no magic wand you can wave in order to avoid business insolvency, as the factors that contribute to a company’s financial downturn are often diverse. Perhaps there is a declining market for the products or services offered by your company? Or maybe new competitors are taking away a large percentage of your usual business?
The specific market influences that lead your business towards insolvency are not always easily identifiable. However, by re-addressing the way in which your business deals with its financial responsibilities, you can at least take some very practical steps towards avoiding the worst case scenario.
Minimise The Stock You Hold
Many businesses hold far more stock than they actually need, “just in case”. For a business that is in danger of becoming insolvent however, this kind of relaxed approach is financial suicide. Naturally, you don’t want to be caught short if there should be a sudden influx of custom (this could save your business of course). But equally, having excessive stock levels just isn’t financially viable for business in this position. Instead, keep stock levels at a low and arrange for faster delivery times with your key suppliers.
Maintain A Strong Relationship With Suppliers
As soon as you begin defecting on payments to your key suppliers, you’re already setting the wheels of insolvency in motion. Prolonging or avoiding payments may seem like a good short term solution, but it won’t do anything other than drive your finances further towards the red. Suppliers will soon grow tiresome of missed or late payments, and may even refuse to continue supplying you. As much as anything, you need to maintain and strong relationship with your suppliers in order to be physical capable of continuing business in the future.
Don’t Be Afraid To Ask For Help
Some businesses ‘clam up’ when things begin to look bleak, refusing to accept that their financial matters may be spiralling out of their own control. Clearly, businesses facing insolvency need professional help. So don’t be afraid to contact Gibson Hewitt, or any other professional insolvency advice practitioner. It could be the thing that saves you.
The Best Chance At Avoiding Insolvency
It’s not necessarily easy to pinpoint exactly why some businesses fall into financial problems. But by minimising your stock, maintaining good ties with suppliers and seeking professional advice, you’ll at least give your business the best chance at avoiding insolvency.