Taking advice can pay-off
STEVEN LAW, business recovery partner at Ensors Chatered Accountants, says taking early advice is crucial for businesses in financial difficulty
IT HAS been the politicians who have been doing the talking recently in order to secure our votes and now is the time for them to turn those words into deeds to ensure that the recent signs of recovery are not eroded.
As the UK emerges from recession there is every indication that this will be a slow and, for some people, painful process, and that businesses will continue to face many challenges.
It is anticipated that with such severe pressure on the public purse, HM Revenue & Customs may be required to increase the steps it is taking to collect outstanding tax.
There is likely to be an increase in the rate of VAT and all of this will serve to put pressure on cash.
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As this pressure increases and the need to collect and retain cash becomes paramount, the general feeling of goodwill in the business community may start to reduce as self preservation takes over.
If your business does start to encounter difficulties then it is absolutely key that you do not feel that you have to face these problems alone.
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Trying to deal with financial problems on your own can be incredibly time-consuming and will inevitably create a major distraction from operating the core business. It is very easy for businesses to spiral into further decline whilst financial fires are being fought.
The key is, therefore, to engage with all of the stakeholders in your business, to plan and to seek professional advice and assistance. With a properly constructed business plan and financial forecasts you will know when your financial pinch points are going to be. This will enable you to have considered discussions with your bank regarding funding requirements and illustrate when any additional funding required will be repaid.
A plan will enable you to have full and frank discussions with key suppliers/creditors (including your landlord and HMRC) and will be essential if it is necessary to re-negotiate payment terms.
Your professional advisers should always be able to assist with both the preparation of the forecasts and to lead the discussions with creditors and the bank. It is my experience that any request for further credit or increase in terms is considered more sympathetically if it is supported by a letter and forecasts prepared by your advisers. Although you may be initially resistant to incurring the associated costs the benefits in terms of adding credibility to your discussions and negotiations may be what ensures the survival of your business.
This information is given by way of general guidance only, and no action should be taken solely on the basis of the information contained herein. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.