Financial distress: 3 business recovery options

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Financial distress: 3 business recovery options

Creditor pressure and late payment penalties can be very stressful.  Depending on severity, there are a few options which can help a company to move away from insolvency as long as there's a realistic prospect of recovery and action is taken quickly.

 Financial Distress - Business Recovery Options

1. Funding & Cash Advances

With invoice financing you can increase cash flow by raising a lump sum of capital immediately to be reinvested into your business and support ongoing trading.  It is also possible to raise funding by way of a loan secured on company assets.  If carefully managed it can help with cash flow and halt any pending legal action. 

2. Company Voluntary Arrangement (CVA)

A CVA enables a company to reach an agreement with its creditors about how debt is to be repaid and may provide for partial or full repayment depending on what the company can reasonably afford to pay. 

3. Company Restart

If the options above have been exhausted then a 'restart' may be the right thing to do. The existing company is closed and the directors have the opportunity to purchase the assets during the process, to trade on in a new company.   

This option is usually the last one to use as the original company is closed, but it can mean keeping assets, employees and clients.  Starting afresh without the debt.

Next Steps

If you would like to know more about how to recover a business with financial distress please call 0121 201 1720.