Ten Step Guide to Dealing with Financial Problems

If your cash flow forecast reveals an impending financial problem or your creditors are banging on your door, what should you do?

Running a business can be stressful at the best of times. But what happens when your business takes a turn for the worst. Mounting debts, agitated creditors and even the threat of court proceedings can leave you feeling out of control and isolated.

If you take action you can help yourself – If you don’t you’ll never be in control of the situation and put yourself at risk of being completely at the mercy of your creditors. These ten tips will help you to start taking control.

1. Accept the problem
The first and most important step is to acknowledge that you have a problem that you are unlikely to solve on your own. Seeking advice from your accountant will help clarify your options and ensure that you stay on the right side of the law.

2. It’s good to talk
Talk to your creditors or their advisers. You need to get your creditors on your side and not talking to them won’t help that.

3. Inform
Keep creditors informed as to how you are doing, and if a payment to them is going to be late – tell them.

4. Consider offering instalments.
Most companies would prefer to receive a realistic sum weekly or monthly rather than nothing or having to revert to court action.

5. Plan Ahead
Prepare a weekly cash flow forecast that you can use to measure and monitor your expenses and sales. This will help to identify what cash is available to pay creditors. Using tools such as spreadsheets can help to make the process of cash flow forecasting much easier as you adjust for weekly changes.

6. Don’t be threatened
Don’t be threatened yourself. Debt is commonplace and for many reasons creditors sometimes overextend themselves

7. Work the problem
Most problems can be worked through given time and goodwill. Bankruptcy or insolvency are processes that protect both creditor and debtor, so don’t be bullied into paying Peter at the expense of Paul.

8. Detail in Writing
Detail in writing and get written agreements to any offers you make. Keep records of any phone call, dates, times and details so if you need to you can provide that you did renegotiate agreements.

9. Sink or Swim
If you are still sinking seek help – Morris Palmer can help you and we won’t charge for an initial consultation.

10. Prevention is better than Cure
Careful cashflow management and the use of financial outsourcing provided by Morris Palmer keeps your business one step ahead of financial problems. Identifying a problem before it becomes an issue means that you can deal with it pro-actively.

For further information, please email us on solutions@morrispalmer.co.uk or call us on 01403 750 444