A company can go into administration for a number of reasons. It may be facing debt problems, it could have a trading position that is no longer sustainable or the directors could be unable to continue to run the business and it may be time for a new management team to take over.
Cash Flow
When your business faces going into administration it can be a scary time. But there are things you can do to get your cash flow right and help keep your business on track.
Getting your cash flow right is essential because it ensures you have enough money to pay employees, suppliers, rent and other operating costs on time. Having a good balance of inflows and outflows is also important because it allows you to reinvest and grow your business.
A key issue for many small businesses is non-payment by customers. This can have a huge impact on cash flow because it means you have to generate losses to make up for the lack of income.
Creditors
There are a number of ways you can get in touch with your creditors when your business goes into administration. These range from a simple phone call to a formal meeting or even online chat if you prefer. It’s also worth knowing that you can find out a lot about your customer’s financial status from Companies House, the London gizmo or any of a number of other sources.
You’ll be pleased to know that many businesses under administration are able to keep trading – and in some cases you can get your money back. This is because of laws and rules governing credit card and loan processing that are designed to ensure consumers do not lose out on cash they are due. If you are one of the lucky few, you can even opt to see your goods through a process known as a ‘lay-by’.
Find Out Who The Administrators Are
During administration, the company’s directors hand over control of their business and assets to a licensed insolvency practitioner. This allows the administrator to protect the company from creditors threatening legal action, and gives them time to put together a restructuring plan.
Having a good understanding of what happens when a company goes into administration is essential for both employees and owners. This will help you to understand whether you’re likely to lose your job and find out if you can divert the process before it’s too late.
Professional Advice
Whether you’re an owner or employee, the best way to deal with your business going into administration is to get professional advice as soon as possible. This will help you make the right choices and ensure that your business survives the administration.
The process is a bit of a minefield and can be confusing, especially if you haven’t had to deal with an insolvency before. However, there are a few things you can do to make the situation easier on yourself.
