Business Recovery and Turnaround

Any business that is experiencing a downturn in their performance must remember that communication is a critical part of any survival strategy. It is also vital that prompt action is taken and it is really important that you speak to your Accountant who will be able to help and point you in the right direction and recommend people for you to talk too. 

Our advice for any business owner is to talk to Turnaround and Insolvency Practitioners as soon as possible, the earlier help is sought the easier it is to plan for the future, these people are experts and have the experience to advise, suggest and support the business properly to the benefit of all concerned.

The two main creditor organisations who will apply the most pressure are HMRC and your businesses Funders. It is imperative that you keep both of these creditors up to speed with your business as both can take swift and severe actions, particularly when they are not aware of your circumstances or have not been kept appraised of the reasons behind any missed payments or items returned by your bank.

There appears to be a perceived stigma if you approach an Insolvency or Turnaround Practitioner, these are however, the experts and will be able to talk you through the numerous options that are available to businesses and who are the best people to talk to, as already indicated the earlier their advice is sought then the easier it can be to structure a plan of recovery.

Taking prompt action is critical to any recovery process and identifying the problem early, even pre-empting a potential problem will enable the business to have more financial options open to them. If your bank, HMRC or indeed other creditors can see that a plan has been put in place and it is achievable they are usually more willing to work with a business throughout its turnaround and recovery process especially if it can be seen that expert advice has been sought.

When a business owner is talking to lenders, banks or any other finance providers to support a turnaround plan, it is vital that the he does not hide anything and he has to be as truthful and honest as he can be about the business’ finances. Honesty about the business’s struggles and a robust turnaround plan gives the company creditability and it will also be under-pinned by the advisor whose assistance and guidance has been sought. It must also be realistic, as false promises that cannot be achieved will do more financial harm than good.

There are plenty of financial options available for businesses looking for turnaround and recovery support. One of these is the possibility of raising additional money from the sales ledger, there is also the chance that further monies can be raised by looking at other assets of the business such as freehold property, stock or plant and machinery. These possible options can assist with funding for pressing creditors to buy more time but could also be a long term solution for working capital requirements.

Here at Plummer Parsons we do have contact with Insolvency Practitioners and turnaround professionals who can identify the various appropriate funding options that are available. It is essential to both the funder and business owner to understand what actions will be required and what the options are to ensure the funder will get their money back and to agree what security is available should the company not be able to pay later. The Insolvency Practitioner will also be able to review the security that is available to maximise its value and speak with the most appropriate type of lender or lenders.

If you would like to discuss any potential areas of concern then please speak with your partner or his manager.