16 Dec 2022

Navigating the feast and famine of insolvency

The UK’s economic climate looks to remain, at best, uncertain for the foreseeable future, with some predicting that the economy will be falling until summer 2023. As such, the business recovery and insolvency industry will see waves of new business over the coming months. Like all industries, the ebbs and flows should be managed effectively – and downtime should be taken advantage of to get ahead of the curve.

As an industry, insolvency tends to find that in a peak busy period, it can be a challenge to find sufficiently experienced staff. Unfortunately, when firms then go quiet, they tend to make redundancies.

To avoid this cyclic ‘undoing’ of the good work of the busy season by haemorrhaging staff as activity quietens, insolvency and restructuring firms need to play the longer game, accepting that over a ten- or 20-year period, there are going to be several cycles of work. Efforts should therefore be concentrated on finding ways to keep experienced staff busy and useful so that when work picks up again, they are in a stronger position to cope with it, rather than a weaker one.

So, what can firms do to ride the wave as the tide of insolvency goes in and out with the economy?

When work speeds up
When all hands are on deck for the ‘feast’ season, it may be a good time to consider internal secondments to ensure resources are being utilised effectively. Secondments are a first port of call to help teams out of a particularly busy period and provide a short term, financially viable fix. In the same vein, joint appointments of reciprocal Insolvency Practitioners (IPs) mean the workload can be shared.

Outsourcing certain processes and tasks also serves a valuable purpose, especially on larger cases where closing older ones is needed. Growing and scaling businesses would do well to utilise the services available to free up capacity for tasks more aligned with their priorities.

Above all, a busy season offers opportunity to assess and absorb trends in the market and economy. Keeping your ear to the ground and paying attention to industry news when the market is buoyant will put you in better stead when predicting events and patterns later down the line.

When work slows down
During a 'famine', take advantage of this time to progress older cases to closure or other tasks that have fallen to the bottom of the to-do list. Perhaps getting ahead of compliance and technical updates to save unnecessary issues later.

The ongoing talent and skills shortages also pose an opportunity for teams to take on new training and learning and development initiatives such as the Continuing Professional Development (CPD) Accreditation. Make good use of the relative ‘downtime’ in a way which not only prepares staff so that they are ready to capitalise when there is an uptick in work, but also which motivates them.

Use the time to help employees to add more strings to their bow of abilities, upskilling them so that they can plug any gaps or work across multiple teams. Not only will it ensure that any talent weaknesses are addressed but will also help to make them a more ‘rounded individual’ ready to adapt to evolving situations, that may be outside of their job description.

Make use of the lull to pay attention to areas that may be overlooked in busier periods but will ultimately boost the profile of the firm. Promotional activities are often ignored when the workforce is against the wall but giving some TLC to social media and other marketing efforts will serve you in the long run.

It may be tempting to batten down the hatches, but going into stealth mode will not only likely have a negative effect on staff morale but won’t benefit you when things pick back up and you are scrambling to put a strategy in place, struggling to manage leads or have little to no social media presence, for example.

The peaks and troughs of insolvency each pose different challenges and opportunities. Those firms and teams who are able to adapt, use their time wisely and prepare well are the most likely to flourish.

And if you are struggling to attract talent to help your business to develop, make sure that you are highlighting the positives of a career in insolvency. Media coverage of corporate insolvency focuses overwhelmingly on job losses, so it’s always negative. But this is an exciting profession, with variety and scope for making a positive impact on the business world. For example, there are regular successes in restructuring and turnaround, which are all about problem solving and helping people.

If you need support, or just want to speak through your options with a financial expert, reach out to us today. The first step is a completely free and confidential consultation. We will use this time to understand your financial circumstances, where you are now and where you need to be.

We provide real, practical, down-to-earth advice on how to tackle your problems, including help with restructuring debts and negotiating informal arrangements with creditors. https://www.monahans.co.uk/services/business-recovery-insolvency

Paul Beecham