My company has cash flow problems: what are my options for recovery?
Cash flow problems occur when debt payments outweigh your income. A firm becomes insolvent when it is unable to meet its financial liabilities as and when they fall due. While this does not necessarily equate to cash flow problems, the two are usually closely related. When your business experiences cash flow problems, many more issues can arise which may lead to formal insolvency proceedings – which is why you should seek help from a professional insolvency specialist as early as possible. You need to face the facts – is it a temporary problem that can be resolved, or are there serious underlying problems which require significant changes to turn things around? Once you experience cash flow problems, the biggest worry for directors is being served with a wind up application by creditors which means your company may potentially be a matter of days from liquidation.
Cash flow can be improved in many different ways – for example, increasing income, improving profit margins or reducing the debt repayments to creditors through negotiations. If, despite your best efforts, you’re unable to increase income and you can’t afford to pay off your bills and debts, then the only remaining option for rescuing your business from insolvency is to approach your creditors and the ATO with a payment arrangement to begin the road to recovery. Financial Distress Solutions specialises in dealing with creditors such as the ATO. We can negotiate payment arrangements on your behalf or look into funding options such as invoice factoring to give you more breathing space. Factoring lets you take a loan against business debts that are owed to you. If outstanding invoices are causing you to operate without adequate cash flow, this could be the best short-term solution for your company.
For more information on how to handle cash flow problems and the options available for your company, arrange a free and confidential consultation with a Financial Distress Solutions specialist at one of our 14 offices across Australia, or call our Director Hotline for immediate and expert advice from a registered insolvency practitioner.
What is a cash flow problem?
There could be a number of reasons why a business is experiencing cash flow problems, but usually the causes can be categorised into three main areas:
- A surplus of outstanding or uncollected invoices
- Products / services not turning over
- Inadequate business model / poor management practices
Financial Distress Solutions can quickly identify the underlying causes of your difficulties so you can start turning around your business. A full understanding of your business and thorough analysis of your books is required before we can suggest a viable road to recovery.
How can your business overcome a cash flow problem?
There are several actions you can take – but primarily, you need to understand that cash flow problems often indicate that your business may be insolvent right now. If your company is insolvent with no thought to how bills will be paid in the future, serious problems can arise. We recommend speaking to an insolvency specialist to see how you can quickly make funds available to get up to date with your creditors. Financial Distress Solutions is here to help you stay out of court and in business.
Options we can explore
Whether you need to restructure your business, obtain financing or set up a Deed of Company Arrangement with creditors, we’re here to help you find the right solution to your problems. Sometimes these matters can be cleared up quickly and easily. Financial Distress Solutions primary goal is to help your company survive financial distress. Your initial consultation is free, we can start helping you immediately, and there is no fee unless we undertake an agreed action for you. Cash flow problems needn’t mean the end of the road for your company. Call us today to see how we can help you turn your business around. We are business turnaround experts.