KIRKLEES companies facing financial problems have urged to seek expert help – before it is too late.
Huddersfield insolvency practitioner Peter Sargent said company bosses should also learn to recognise the signs that their business could be in trouble.
Mr Sargent, partner at rescue and recovery specialist Begbies Traynor, said: “It pays to be aware of the warning signs that could signal insolvency for a business if prompt action isn't taken.
“Continually asking for top-up facilities; having cheques returned by the bank; receiving writs for paying creditors late; a build up of arrears with the Crown for PAYE and VAT; and a high turnover of staff are all symptoms of business distress that can rapidly snowball into insolvency if the right course of action is not set in motion rapidly.”
And he said: “When your business starts to show the first signs of distress, getting good professional advisers on board before the decline has gone too far is essential. The earlier you take advice, the more options you will have to help turn the company around.
“An expert in insolvency and restructuring will work to gain a comprehensive understanding of your business and why it is underperforming.
“Insolvency practitioners and restructuring specialists are trained to look at companies' financial problems with an independent perspective and a fresh pair of eyes that it’s virtually impossible for directors, caught up in the day-to-day running of the business, to do.”
Mr Sargent said: “A quick-fix solution is seldom the answer when a business is in trouble.
“Taking expert advice will provide a detailed analysis of the problems and professionals can work with you to develop a plan to take the company forward.
““Having obtained a full financial picture of the company’s situation, an insolvency practitioner might devise a plan that focuses on managing the business for cash flow rather than for profit in the short term. This may include selling off surplus assets, making staff redundant, chasing outstanding payments and concentrating on the cash-generative parts of the business.”
And Mr Sargent warned: “If you think your company is heading for insolvency, it’s important not to simply try to carry on regardless.
“Company directors who continue trading while insolvent may be guilty of wrongful or fraudulent trading and could face prosecution.
“What’s more, swiftly acknowledging that things have gone wrong and taking expert professional advice from an expert insolvency practitioner are the essential first steps to improving the situation.”
Mr Sargent said it was essential that firms in financial difficulties talk to their creditors. “The tough economic conditions of the past five years have seen attitudes towards businesses that have difficulty paying their creditors change, creating a greater degree of patience and a new willingness to negotiate,” he said.
“For a company director, spending large amounts of time fending off creditors will, itself, have a detrimental effect on the business he or she should be running. So it makes sense to bring an expert adviser on board who is highly experienced in negotiating payment plans with HMRC and other creditors.
“Whatever you do, don’t be afraid to ask for help – it could be crucial to the future of your business.”