Five Signs That Your Business is Facing Insolvency
As a business owner, no matter how large or small your organisation is, you take pride in the work that you do, and if you started the business from the ground up, you probably feel like it is really a part of you, so you never want to see it fail. However, when it comes to business, sometimes you can do the best you can yet still face hardships due to external circumstances that are completely out of your control.
It is important to always keep an eye on your business’ finances to steer clear of becoming insolvent and facing liquidation, in which case your business would be completely dissolved. Facing insolvency is a very scary situation, but preparing ahead of time and making changes as soon as you notice the following signs of insolvency can make all the difference in the world to keep your business afloat.
1. You Lack Consistent Sales & Your Books Are Out of Date
If your company is finding it harder to make sales and meet the required revenue each month to pay off your bills and continue operating effectively, you need to make some drastic changes to attract customers. Also, make sure your accounting is up-to-date so that you can tell exactly how much money should be going out to pay debt and how much money should be coming in from customers you have done work for. If your financial records aren’t stable, there is no way you will be able to forecast the future of your company or even tell what is going on currently in an accurate fashion.
2. Your Customers Owe You Money
If you find that your books are showing that you have a lot of customers that owe you money, have one of your employees stay on top of getting in touch with these delinquent customers to get you the money you deserve.
3. You Cannot Get a Secure Loan from a Reputable Source
If your company is in need of funding right away, but you aren’t doing well enough for a lender to be secure in giving you a loan, this is a sign that your organisation is facing insolvency. Your company’s credit is important, and when you are in debt and your credit has been harmed so much that lenders don’t want to deal with you, you are in trouble, especially if you need to make a large investment into your company to keep it going, make improvements, etc. If you find yourself asking friends and family members for loans, your business is definitely in trouble, as this is something that you should never need to do.
4. You Cannot Pay Your Bills
If your vendors, creditors, suppliers, etc. are demanding that you pay cash on delivery because you cannot pay your bills on time, this is a sign that you have a poor reputation and your revenue is not covering your costs.
5. You Can’t Pay Your Taxes
Avoiding paying your taxes on time means you can keep current cash on hand for other expenses, but in the long run, this will really hurt your business because you will face penalties and fees for those late tax payments.
Laura is a writer for www.realbusinessrescue.co.uk, a site that provides tips to business owners who are struggling to survive.