When a business has financial difficulty the first priority is to establish that it is not trading insolvent. This is especially important for Limited Companies as under UK Law. If a company is trading insolvent and they cease to trade, this may result in the directors having to contribute personally to the company losses.
Self employed business owners by nature are usually self confident and independent, they can find it hard to ask for help, especially considering the time and effort that would have gone into building their business.
IDM when working with businesses with financial difficulty, work with the business owner to find a debt solution, where possible to keep the company trading.
WHAT WE DO
Independent Debt Management when assessing a businesses financial position look at all aspects, not just the business owner’s personal debts. In summary what we do is listed below:
Budgets - We will carry out an in-depth study of the company budget. How much is coming in, how much is going out and how much is being drawn by the business owners.
Minimising - IDM will look to minimise debts, making sure that any borrowing was provided correctly with no misinterpretation or with insurances that were not correctly explained.
Maximising Income - The scope to improve a business owner’s income is often easier than that of employees. Reducing business costs is often the first step, combined with the claiming of grants or benefits that owners are entitled too.
Negotiation - We can negotiate on behalf of a business to reduce the monthly amount paid to creditors or suppliers, it is in their interest to listen to us because if the business fails, they potentially get nothing.
Priority Debts - Rent, Commercial Mortgages, Tax, Services, VAT are a few of the priority debts that must be taken care of first. If, using the law, these creditors take action to recover money owed, it may lead to the immediate failure of the business. Effectively these creditors get paid first, not the creditor that shouts the loudest.
Non Priority Debts - These are the debts that will not normally result in the failure of the business. However because these debts can be repaid by negotiation, at a rate that is affordable rather than demanded, these are often recovered more aggressively than priority debts.
We have summarised what we do above for ease of reading only, we must make it clear that the in-depth study of a business by Independent Debt Management, may take several days to compile.
Once we have the all facts and figures we can inform the business as to its available options or whether or not it is trading insolvent.
There is no over night solution to a business debt problem, business owners should be aware of companies offering quick solutions as they may only be interested in the owners personal debts.
SMALL BUSINESS DEBTS
~ Sole Trader
An individual who is self employed without business partners, such as a plumber, bricklayer or painter and decorator. They can work using their own names or under a business name. A sole trader is legally responsible for business debts in the same way they are responsible for their personal debts.
~ Limited Company
Where a separate legal body is set up to sell, produce etc. to make a profit. The profits can be keep in house or distributed to shareholders. A limited company can be publicly or privately owned. Directors of companies are not personally liable for business debts providing there were no fraudulent activities and they are not a guarantor.
Where two or more partners run a business to make profit and are normally considered as being one entity. Partners can trade under their own names or under a business name. Partners are normally only responsible for debts that occur during the time he or she is a member of the partnership. Partners may be held responsible for these debts even after they have left the partnership, unless otherwise agreed.
~ Limited Liability Partnership
This type of business came into existence in 2000 and has some of the characteristics of a partnership and some of a company. Providing negligence is not involved the liability to the members to contribute to debts are limited to the business assets.
A franchise is a business with a renewable agreement to run a branch of a business that has been set up by someone else. A franchise can be run by a sole trader, partnership or as a limited company. The choice in the way the franchise is run will dictate how business debts are dealt with and who is liable.
Wherever possible, Independent Debt Managements aim, when dealing with business debts, is to keep the company trading and not to simply palace it into receivership.
Some of the business debt options are listed below:
* Informal Arrangement
* Company Voluntary Arrangement
* Striking Off and Dissolution
To let you know what we have done recently for our business clients we have listed a few successes below:
1. Negotiated a payment of £200.00 a month for a debt owed to HMCR of £25,000.00. This has stayed bankruptcy proceedings and given the business time to restructure.
2. Negotiated with a creditor who had a walk in possession order for goods to be removed to the value of £2,500.00, to accept monthly payments of £64.00. Had the goods been removed the business would have gone into liquidation.
3. Got a landscaper supplier to accept reduced monthly instalments for outstanding invoices, after the business had a down turn in projects caused by the present economic climate. The suppliers also agreed to continue supplying materials on a cash only basis.
4. A creditor had issued a statutory demand for non payment of rent arrears for £5078.00. We negotiated with the creditor to accepted £100.00 a month towards the outstanding arrears allowing the business to continue trading.
5. Following an initial consultation and in-depth study of three different businesses, we discovered that they had “no” or a “poor” internet presence. All tree business are now doing well after our IT section built each one, a 5 page website.
CONFIDENTIAL HELP & DEBT ADVICE
If your business is suffering financial difficulties the sooner you to talk to someone the better the chances are, that you can continue to trade. All calls taken by us are in complete confidence.
You can contact us in complete confidence to see how we can help you, on our national debt advice line:|
0800 085 5613