Signs of Company Insolvency - How you deal with creditors
The first indicator will be obvious and will be manifest of failing the cash flow test in any event. Do you will find it hard to pay your creditors within their credit terms as cash is short? You find that creditors which extended you 30 days to pay are not being paid for 60 or 90 days. You can't now get stock because you have been late in paying your suppliers. This is obviously a big problem, as without stock you can't produce goods which you need to sell to raise the cash to pay the suppliers, and so the cycle goes. Are your company creditor days growing? Do you even know what your creditor days are? This is the amount of debt you owe your creditors divided by your sales per annum multiplied by 365. Do you have a problem getting new credit or extending the credit that you already have because you have not get to original terms before? You will see that many of these problems stem from lack of cash. You do not meet agreed payment terms. You get demand letters for payment from suppliers. You are robbing Peter to pay Paul. You are always trying to avoid supplier calls as you know they are chasing payment. If you feel that you do not have enough cash to operate efficiently, there are ways to release more cash and you should take professional advice to see how this can be done. About Author Steve is a qualified solicitor who specialises in debt solutions for businesses and companies alike. From pre-pack administrations to walk through bankruptcys he is always free to talk to. Disclaimer: Article submitters are solely responsible for the content of their articles. ArtiLib can't be held liable for the contents of the articles. Report Abuse | Browse By Category |
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