Insolvency is the last thing that any business wants to be faced with. This is an inability to pay their debts to suppliers, employees, landlords. When it comes to paying back debts, insolvency is an issue when the debts are higher than the value of the assets that the business owns. There are a couple of different scenarios that can play out. If the business is a sole trader or partnership, it will go into bankruptcy. If it is a company, it will go into liquidation. Neither scenario is a good one to be in. Principle Insolvency is here to talk about ways that businesses can avoid going into insolvency in the first place.
What Businesses Can Do to Avoid Insolvency
If you are a business owner and you suddenly realize that the debt you have is becoming a problem, there are some steps you can take to avoid becoming insolvent.
– Start Selling Assets: If you’re looking for a way to get some quick cash that can be used to pay off your debtors, you might want to consider selling some of your assets to do it. This can help you avoid paying interest and penalties that you have no business paying in your current financial state. It can also help you show your creditors that you’re making a real effort to pay them back. This can leave them more willing to work with you.
– Time to Negotiate: This leads us to the next part of avoiding insolvency which is negotiation. There may be some creditors that are open to coming up with an arrangement that helps you pay them the money they are owed. This might include more time for repayments, lower interest rates, or fewer penalties charged. It is worth an honest conversation with your creditors.
– Don’t Take on New Debt: It should be obvious, but if you are struggling to pay the debts that you currently owe, you shouldn’t be taking on any other debts at this time. Sometimes, business owners are tempted by debt consolidation as an answer to their problems. However, this can create more problems if you aren’t careful. Before making this sort of agreement, it is wise to consult with a financial expert to determine whether or not this would actually work to your benefit.
– Work with an Insolvency Practitioner: It can be overwhelming when your business is struggling to stay afloat. When you turn to an insolvency practitioner, they can help you explore your options that might include restructuring debts, new repayment plans, and more. The goal is to help you stay in business.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If you know that you’re in financial trouble, it is time to turn to Principle Insolvency to help you explore your options. We will work with you as a business owner to help your business get back on its feet. We can help you solve your financial woes. Call us today!