Running a business day to day can be very stressful, this isn’t helped when creditors are constantly chasing you for outstanding invoices. Are you finding that you are struggling to pay your creditors even though they’ve already provided or extended your credit terms to 30 days, 60 days or even more? If you are then this is a sign that you need to stop and take some professional advice and try and find the problem so you can solve it.
By the time you’re probably reading this, you are probably at the next stage with creditors where they may have taken or threatened legal action against your firm.
Actions taken by creditors should not be ignored as they can have severe consequences on you and your business. Ignore calls from creditors can escalate things very quickly and need to be dealt with in a timely manner.
Actions that Creditors legally Might take To Recover Money?
County Court Summons
County Court Judgement
Notice Of Enforcement
Winding Up Petition
Commercial rent Arrears Recovery
Controlled Goods Agreement
There are various options when it comes to dealing with pressure from creditors and these can include:
Creditors Voluntary Liquidation (CVL)
Creditors Voluntary Liquidation is the voluntary winding up of a company that can no longer afford to pay its debt and is insolvent on cash flow or balance sheet basis.
Members Voluntary Liquidation (MVL)
Members Voluntary Liquidation is the voluntary winding up of a company that is no longer trading and funds need to be distributed to shareholders once all creditors have been settled. This is used as a tax-efficient way to close a company as long as the shareholders qualify for entrepreneurs relief.
Company administrator is an insolvency procedure that is usually used either to rescue a company as a going concern, achieve a better result for creditors or realising property for the benefit of a secured creditor.
Company Voluntary Arrangement (CVA)
Company Voluntary Arrangement is a formal agreement between the company and its creditors. This agreement allows the directors to keep control of the company and continue trading while under protection from legal action and settling its debts at the same time.
Invoice Finance is a form of lending money to a company that is secured against invoices the company has generated. This in turn frees up cash from slow-paying accounts allowing the company to grow. This is only viable for businesses that trade business to business and not business to consumer.
Pre Pack Administration
Pre-packaged (or ‘pre-pack’) administration, is an arrangement for the sale of all or part of a company, this can include business and assets.
As a director of a limited company, you are entitled to claim redundancy just as any other employee is entitled to. Your claim is processed and paid through the governments National Insurance Fund and Redundancy Payment Service (RPS).