Insolvency occurs when you are unable to pay your business debts when they are due.
As insolvency lawyers in Geelong, we notice that there tend to be warning signs that your business may be insolvent. Whilst, insolvency isn’t always avoidable, there are a few things you can do to try to turn your business around if it is facing a potential bankruptcy or liquidation.
1/ Prioritise your debts
Focus on secured debt and prioritise loans against your business, especially any equipment loans. The last thing you need is to lose the equipment you need to run your business as you defaulted on the loan. Second, pay off high-interest debts. The longer you take to pay off high-interest debt, the more you accumulate.
2/ Assess and reduce your expenses
There are always small expenses you can trim. In our techie world, magazine subscriptions in the waiting room or even a landline business telephone number are expenses you may be able to cut. How about using Zoom or phone calls instead of travelling to in-person meetings? What about trimming your non-performing products and increasing your product runs off the ones that are outperforming? How about negotiating with suppliers for bulk discounts or longer payment terms? Sometimes you just need to ask or look around and see where you can save a few dollars here and there. It all adds up.
3/ Boost your short term cash flow
Chasing invoices is a pain, but getting what you are owed is critical to your business cash flow. Reducing your payment time frame or offering a discount if customers and clients pay sooner are two great ways to increase your cash flow. Conversely, negotiate with your suppliers for payment extensions until you get back on your feet.
Potentially, you will have more money coming in, money going out less frequently, giving you more money to deal with your debts.
4/ Sell assets you no longer use
If you have any unused assets, sell them. Or, look at how you use your equipment and office/warehouse space and determine if it is underutilised. Could you rent out a meeting room in your office to bring in some extra cash?
5/ Flexible staff arrangements
No one likes to let staff go. However, staffing can be a significant expense. Work out which roles are core to the operation of the business and keep them on even if it is part-time. Then, use casual employees to fill out other positions.
Insolvency lawyers in Geelong
Our legal team at Whyte, Just & Moore, has a proven track record of helping businesses across Victoria through tough times. If your business is facing insolvency contact WJM insolvency lawyers on 03 5222 2077 for a free initial insolvency consultation discussion. As experienced insolvency lawyers, we can work with you to implement a strategy to maximise returns and realisations whilst managing claims.
Helping businesses throughout Geelong, Surf Coast and the Bellarine Peninsula since 1877.