Last Updated on Feb 18, 2020 by James W
The shifting economy has affected many people, workers and businesses across the country. But whilst times are certainly hard, there are options available to the majority of companies who are experiencing, what they perceive as, extreme business debt.
From company directors to self-employed window cleaners and mobile hairdressers, the recession has caused many businesses to change the way in which they operate. As banks are offering a lowered rate on savings, the majority of their customers are choosing to dip into these to re-pay loans and get back into the black.
As saving rates decrease, interest rates are doing the opposite, an unwelcoming occurrence for any struggling business. But before deciding to spend every last penny that is made on paying off outstanding debt, it is highly advisable to consider the many debt management plans that are available to those in the private sector.
Debt management plans
Seeking advice from financial professionals is always ideal when facing a situation of extreme business debt. Although it may seem as though there is no way out of the red, many creditors are only too happy to agree to a DMP. CVAs and IVAs are particular popular amongst businesses and the self-employed who wish to continue trading as normal whilst paying off their debt. These types of arrangements are highly advantageous for those companies who are experiencing an acceptable level of success at the time of the debt.
Cost Cutting Options
At times like these, CEOs and directors are required to have a serious think about the current operation of their business. Changing suppliers, offices or site and using in-house recruiting services are all realistic ways of cutting costs before redundancies and unpaid leave has to be debated. Better management of accounting records can also have a massive effect on the financial state of the company. By ensuring that all documents are up to date, accurate and acted upon promptly, new problems are less likely to arise and accountants and directors are fully aware of their current financial position.
Administration and Closure
For businesses, a winding up petition is commonly used when forced closure of a company is required. This is only likely to happen if the business has outstanding debt with more than one creditor and two or more feel that closure is necessary. To avoid these situations, DMPs and cost cutting schemes are highly advisable as winding up petitions can cause further implications for a struggling company.
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