According to the latest figures from the Insolvency Service, the number of business insolvencies registered during the first quarter of 2012 was 4.3 higher than during the same quarter in the previous year.
With news that the country has returned to technical recession, there is concern that this figure could rise further.
If your business is in financial difficulty and struggling to meet its debt obligations, it is important that you tackle the problem head on. All too frequently business owners try to ignore the debt, hoping that they will be able to deal with it at a later date. In reality, by ignoring the problem you will only exacerbate it.
Your first step should be to determine exactly how much you owe, and to whom you owe it. Make a list of all your outstanding obligations, and work out exactly how much you can afford to pay each month.
You should then approach you creditors directly, and try to negotiate a new repayment plan. This might involve paying less each month over a longer period, enabling you to get a tighter hold on your finances. Don’t presume that your creditors will necessarily turn you down. Lenders will often be happy to negotiate – particularly if the alternative is likely to be a write-off of part or all part of the loan.
It is also important to consider ways in which you can ease your cashflow situation. Small businesses are often remarkably lax when it comes to raising and chasing invoices, and this can have a disastrous impact on your ability to pay your debt obligations. It is imperative that you invoice promptly, and that you chase late payment. Good credit management practices should be built into the day-to-day life of your business. You should also consider credit checking your customers and clients before extending credit.
Read the full article: Struggling with business debt? Act now on Simply Business
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Replies
One small way I found helpful was simply to deposit in the bank every last penny I earned; you then don't have the temptation to fritter away the cash you think you have, which when added up can make steady dents in debt.
This is a wonderful post and in the past, I've posted about my own personal situation that came up and subsequently lead to me having to choose Bankruptcy.
It's totally devastating and humiliating, it tears your life apart and those close to you as they are living that same life.
My only advice is to back up what Phil said about dealing with any problems the minute you realise its getting financially tight and speak with your creditors to arrange smaller payments, you'd be amazed how many will work with you, after all, they also need your money and paying smaller increments back is much better than paying nothing.
I'm one of the lucky ones. I was forced into bankruptcy due to a creditor pushing too hard after a client went into receivership themselves and things just spiralled at mark1, but I have a new job working in grounds maintenance and I love my new career. The above post is so very prevalent and very good FREE advice.