Insolvency Advice for Small Businesses

The UK economy has been wracked by unprecedented downturns since the onset of the global pandemic in early 2020, and many small businesses are continuing to struggle in an unpredictable economic climate.

With insolvencies on the rise, many small businesses are in need of professional advice to help them survive. If your business is facing financial difficulties, the expert advice of an insolvency practitioner could help you through these tough times.

In this article, the team at Irwin Insolvency explains how professional insolvency advice for small businesses could result in the positive turnaround you need.

How Insolvency Advice Can Help Your Small Business

Insolvency occurs when a business can no longer pay its debts. But even if a company’s accounts are in the red, this doesn’t mean the business has to wind up and close down. In fact, the United Kingdom’s Insolvency Acts provide a legal framework that exists to help businesses – both large and small – to continue trading, reorganise their debts and become solvent again in the future.

As a small business owner, it can be difficult managing day-to-day operations while also dealing with financial difficulties. If you’re facing financial trouble, insolvency practitioners provide insolvency advice for small businesses that can offer the assistance you need.

For small businesses, there are a multitude of different insolvency procedures that can help you to regain solvency. These vary from simple business advice provided to directors, through to company voluntary arrangements or administration.

Impartial, professional advice can open up new opportunities to consolidate debts, and it can help to buy time with creditors or to lower interest rates. Ultimately, insolvency advice can not only save your business in the short term, but help it to thrive in the long run.

Examples of Insolvency Advice for Small Businesses

Small business owners don’t always realise that there are many different ways out of insolvency. For example, insolvency practitioners can provide impartial and professional advice on the following, all of which can help small businesses:

  • Long-term solvency planning
  • Business turnaround plans
  • Company voluntary arrangements
  • Administration

If a small business continues to struggle and all insolvency measures have already been attempted, a licensed insolvency practitioner can assist with liquidation. Liquidation should always be a last resort, but if it’s absolutely necessary you need the assistance of a skilled professional to ensure the smoothest winding up of a business.

Let’s take a look at these examples of insolvency advice for small businesses in more detail.

Long-Term Solvency Planning

The goal of any business is to remain profitable, and the best way to escape insolvency is to remain solvent in the first instance.

Insolvency practitioners can provide advice that assists with long-term solvency planning, even if the economic forecast seems unpredictable, as it does now.

Examples of long-term solvency planning include providing small business owners with financial advice, advising on financial growth, and reorganising and restructuring the business.

Business Turnaround Plans

If your business is already facing the threat of insolvency, there may still be time to turn things around. A business turnaround is often implemented rapidly, with the primary aim being to save the business from liquidation.

The advice of an experienced insolvency practitioner helps no end in this scenario, as they can provide impartial and often brutal recommendations that can help to restructure and reorganise the business at short notice.

Once the business’s finances and accounts have been rescued and turned around, the business can focus on retaining financial stability and becoming profitable again in the future.

Company Voluntary Arrangements

Company voluntary arrangements (CVAs) are a common insolvency procedure that can be recommended and implemented by a licensed insolvency practitioner. CVAs are essentially an agreement between an insolvent company and the company’s creditors, and it’s a useful way to have debts reorganised and consolidated.

A CVA buys time for a business to turn their finances around, as once agreed upon it stops creditors from harassing the business owner for payment. A CVA can also make debts more manageable, it can reduce interest rates and, in some cases, reduce the debt, too.

Administration

If a business is struggling to escape insolvency, an insolvency practitioner may advise on entering into administration. This is a formal, legal procedure that results in the business owners and directors relinquishing control to an administrator, which in most cases is a licensed insolvency practitioner.

Entering into administration is an opportunity for the business to be restructured and reorganised by the administrator. The business continues trading, although certain assets may need to be sold in order to pay creditors. If the business is successfully turned around, then the administration ends and the owners take back control.

When Is Insolvency Advice for Small Businesses Needed?

It’s never too early to start planning against insolvency, and any small business owner can benefit from impartial insolvency advice even if they are currently profitable. Long-term solvency planning and impartial advice for business growth can help a small business remain solvent, thereby removing the need to implement drastic short-term measures and turnaround plans.

However, if your business is already facing financial trouble, then it’s necessary to ask for advice as soon as possible. The quicker you act, the sooner you can begin to implement turnaround plans or organise insolvency procedures such as CVAs. Leave it too late, and your small business could end up facing no other option other than liquidation.

Contact Irwin Insolvency for Expert Insolvency Advice for Small Businesses

The UK is experiencing an unprecedented time of economic difficulty, but this doesn’t mean your business can’t survive the downturn.

If you’re worried about your business becoming insolvent, the expert advice of a professional insolvency practitioner could be the turnaround you need.

Irwin Insolvency’s expert team specialises in providing insolvency advice for small businesses, and we’re here to help you. Contact Irwin Insolvency today for your free consultation.

Contact Irwin Insolvency today for your free consultation

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0800 009 3173

About the author

Gerald Irwin

Gerald Irwin is founder and director of Sutton Coldfield-based licensed insolvency practitioners and business advisers, Irwin Insolvency. He specialises in corporate recovery, insolvency, rescue and turnaround.