A lot of times when we advise businesses in financial distress they are looking for an outcome that allows them to continue trading, it’s our goal to provide a solution that best fits each business individually and provides the most positive outcome possible.
To help illustrate this process, I thought it would be useful to highlight one of our recent cases;
We were approached to aid a software company producing programmes for the education sector; they had been trading for six years and business had been good in this time.
Recently they had won a contract to provide local schools with a new software product; if it was successful it would be rolled out nationwide providing an excellent and extremely profitable opportunity for the business. However the directors noticed that despite this, turnover was down. Focus had been taken away from the main core of the business while the new software was developed and so other areas had been allowed to slide.
The new software product had taken longer than anticipated to produce and had increased in cost meaning that problems with cash flow began to arise resulting in a build-up of debt that needed to be paid immediately.
We assessed the business’s situation and worked closely with directors and their accountants to ascertain all possible solutions. After thorough consultation we advised the best option to allow the business the time and relief from its creditors that it needed was to implement a Company Voluntary Arrangement (CVA).
With the CVA in place the pressure of debts on the company was removed, they were able to complete their software trial successfully and begin nationwide distribution as a result; even managing to become profitable enough to end their CVA early with a lump sum payment.
If advice is not sought and solutions found, situations like these can very easily progress into failed businesses; some only require time to get back on their feet, out from under the pressure of debts caused by poor cash flow.
Have you come across clients in this very situation? What are the biggest financial concerns facing your clients right now? Please drop me an email at email@example.com with your experiences, I would be happy to reply with any advice you might need for your clients.