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22
Mar

Tips for Financially Troubled Comapnies

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1. Keep Your PAYE & VATE Paid To Date. First rule for the owner of any financially struggling business is to make sure you pay all your PAYE taxes on time, especially those deducted from employees’ wages. Even if you are a sole trader or a limited liability company, the Inland Revenue can hold you personally liable for these taxes plus penalties if they’re not paid. And even if the business goes bankrupt or in the case of a limited company, you could personally and legally be liable to pay them.
 
2. Cash Flow Problems. Cash flow problems are one of the biggest causes of business failure. When you know you don’t have enough sales income coming in to pay the bills that are due, slow your outgoings immediately by cutting expenses to the bone. If you don’t learn to balance your income –V- expenditure you will most certainly be heading for the bankruptcy courts. You must prepare a short-term cash projection and plan for your immediate needs. Make a list of the monies owed to you, and collect as much of it as possible. Pay the necessary items like taxes and overhead costs, but delay paying other bills by working with suppliers and other creditors, talk to these people use your relationship to work out a payment plan.
 
3. Lying About Your Business Debts. I have seen people take business loans out by falsifying there application forms just to get the loan through. Soon after the loan only to find out they are unable to repay the loan back. It is amazing how many of these people think well if the company goes under its hard luck to the bank or the loan company for making the loan. No No No this is not the case, the loans can be reverted back to you personally if they are able to prove that the loan application was fraudulent. Once they are able to prove that it then also becomes a criminal offence also.  So if you decide that you need to apply for a business loan make sure you disclose the financial condition of your business then that way you will have nothing to worry about.
 
4. Transferring Business Assets. What really amazes me that the number of times I have seen business owners transferring assets of the company when they know that the business is heading for bankruptcy. They do the most stupid things you can imagine like transferring property and other assets to friends or family. They must really think that the creditors and the Insolvency Practitioners are not aware of things like this? Dream on, they are fully switched on to these kind of trick and can revert transactions going back as far as 7 years if need be. Again it become a criminal offence once you do this as you are hiding your assets from your creditors.
 
5. Preferential Payments. You as owners are in a position of trust when it comes down to creditors money. Under normal trading it is ok to pay one creditor over another as long as you are paying every one on equal terms. But when your business id going through though financial times and you start paying one creditor over another and the company fails. You could face criminal charges and the transactions can be reversed back by the courts. In the event that your business fails then your outgoing payments will be scrutinised by the creditors or the Insolvency Practitioner to make sure that some creditors weren’t given unfair advantage and paid when others were paid nothing. Creditors who have security will no doubt exercise there rights to terminate and collect on the security.
 
6. Wise to Keep Two Bank Accounts. If your business is facing serious financial problems and owes money to a bank, it’s often wise to keep most of your current and other accounts with another bank who you don’t owe money to. This is because typically your loan agreement gives the bank the right to take your funds without prior notice if the bank thinks you’re in financial trouble. (This is called a "offsetting.") It can be a shock to learn that one morning your bank has suddenly cleared out your funds from your current account.
 
Category : FINANCE

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