Debt Rescue For Companies

Is your company having difficulties with debts? Small to medium sized companies having financial troubles are not uncommon. This is due to worldwide economic slowdown, taxes, several other factors, along with difficulty in obtaining credit. Company debt levels can easily spin out of control when not kept in checked, thus, it is imperative for business owners and managers to have some sort of debt rescue measures in place.

Solutions That Offer Debt Rescue For A Company

There are many ways to tackle debt such as some management processes to cope with company debt:

1. Start by focusing on credit control and cash collection. If you ensure the company is being paid on time, the business will be far less dependent on lines of credit such as the bank overdraft and will have the funds available to pay suppliers.

2. It is far better to spend management time ensuring invoices are correctly issued and debts collected rather than managing creditors who are constantly demanding payment.

3. It may be possible to defer tax payments using the Government time to pay scheme. This will give a short term respite from tax debts and is useful to tide the company over a period where cash is tight. This is not however a solution to a deeper business debt problem as the tax will eventually have to be paid. If you believe you have a more serious company debt problem, you need a robust business turnaround solution.

Rescheduling Debts

1. Consider a Company Voluntary Arrangement (CVA) agreement when unable to pay debts to avoid the risk of formal creditor action against your company. This agreement with your company’s creditors enables you to reduce the amount of payment of debts over a fixed period of time, usually five years. A CVA agreement can write off up to 50% of your company’s debts and there is little upfront investigation required.

2. You may also consider, as an alternative to the above, closing your business and starting over again in the same trade if you want. Through a Pre Pack Administration, you may start a new business without the debts of the previous one. When the old company is closed the creditors are paid from the proceeds of the asset sale. In this setup, the creditors will not be paid wholly and fully but they will receive more than allowing the business to completely fail and close down. Thus, creditors will be more pleased with you closing the business and starting all over.

As you can see, improving internal processes such as invoicing and credit control are a first priority to prevent company debt problems. Should the problem sink, business is in trouble and rescue is badly needed you can opt for either of the two choices suggested under rescheduling debts.

Since company debt is starting to be a worldwide issue, the governments of most countries have enacted projects and laws to save small to medium businesses. Be sure to include in your research the various government debt relief efforts in your country too.