Avoiding insolvency – key action points

Posted: 19th March 2012

For most companies, the most serious period of risk of insolvency occurs during the period in which when they are starting to expand again after a period of recession. When demands on working capital increase and the balance sheet is threadbare, trouble looms.
Here are four key actions to take to help avoid insolvency.
Liquidation Sale
1. Know your cash flow.
An awareness of your current cash position and expected cash flow is essential.
2. Know your costs.
The profitability of any product is a key component of the working capital requirement connected with selling it. Concentrate where possible on achieving high-margin sales.
3. Control your credit.
Keep credit control tight but, where necessary, consider offering discounts for fast settlement. Make sure that you do sufficient work to set sensible credit limits – particularly for new customers.
4. Understand your key performance indicators.
Use these to allow you to take action sooner rather than later when they are not being met. Timely and accurate management accounts are crucial.
If you are concerned about managing the levels of debt in your business or have problems collecting debts due to you, we can help.