Dissolving a business you have built from the ground up and managed for a considerable number of years is understandably a difficult and stressful time. Despite the government’s promises to help small businesses by removing the red tape at the banks and financial institutions, borrowing can be a headache.
There appear to be only two options left if a company cannot seek the usual investment forms. They can consider business rescue services or consider dissolving the company. Both need careful consideration.
If business rescue is your preferred option there are many different ways in which this can be done.
Invoice Financing is where you unlock the finance potential from your sales ledger by either ‘Invoice Factoring’ or ‘Invoice Discounting’, can be managed by Business Recovery Specialists, in order to create a healthy cash flow in your business and it will prevent the owner from having to take out yet another loan.
Asset Financing takes into account what assets you have in the business which can include your sales ledger. Assets owned by your business may include but are not restricted to: Vehicles, plant and machinery, computers and stock. These all have a value and with the right assistance from a Business Recovery Advisor you could unlock cash flow, preventing you having to seek a loan or go into your company overdraft!
Trade Financing is another route companies could consider unlocking finance from, if they move into the import/export market to unlock capital. Key to the success of this is finding a Business Recovery Specialist who can help you navigate the tricky but lucrative world of import and export to help grow your business and unlock that much needed cash flow.
Indeed, just having a complete Financial Restructure can cut the dead weight from the business and allow cash to once again flow through the coffers. It may be that the business can become more efficient in the way it carries out particular operations or procedures, it might be as simple as changing utility supplier, using different couriers or scaling down your staff team. Sometimes it takes a fresh pair of eyes to see where the potential in a business can be tapped.
In the event that these options fail to work, dissolving a company becomes the only solution open to an owner. Reasons for a company having to liquidate can be varied. It can range from the loss of a major client, loss of key staff, loss of stock or premises, or poor cash flow. In this case the law requires that the company be legally dissolved, with the assets sold or redistributed to creditors. To dissolve a company, a company must adhere to certain criteria. The company must have ceased trading for three months; the business cannot have changed name in the last 3 months; the company cannot be subject to any other legal proceedings; and finally, the business must not have made a disposal for value of property or rights. As long as a company fits within the criteria, the owner can apply to Companies House to have the business formally dissolved.
Saying goodbye to any business is hard but before you go straight to insolvency, make sure you consider all of your options first.
Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 0800 157 7355 and you can also follow him on Google+
Every month Business Recovery help businesses improve their cash flow. Request a quote to find out how much extra cash you could raise.