28 Apr 2023

Focus on Business Recovery: What options are there?

Owning a business in the current climate is no mean feat. With some still recovering from the global pandemic, ongoing supply-chain issues and eye watering energy prices, a lot of businesses are, unsurprisingly, struggling.

As a result, the business recovery and insolvency industry anticipate waves of new business over the coming months. At Monahans, our advice would be to act quickly if you are experiencing any struggles as there are a lot of steps that can be taken to steady the waters.

The accountant’s role in business recovery
The business recovery process typically involves a combination of measures to stabilise a company's finances, rebuild customer relationships, and reposition an organisation in the marketplace. This may include steps such as restructuring operations, renegotiating contracts, cutting costs, and delving into new avenues.

Available options will differ between businesses and the accountant’s role will explore solutions to tailor a plan to the individual case, to achieve the best outcome.

In some cases, business owners may want their accountant to manage the wind down element of closing a business, because they have exhausted all options and left it too late for any kind of recovery. In other cases, guidance and support from a professional can give business owners confidence that they are able to continue and educate them on the steps to take in protecting their position.

What can the business recovery process involve?

Analysing costs
The first step in any insolvency or recovery case is tightening costs and implementing a strategy to get on top of a business’s finances. Analysing cashflow will identify areas of the business that are doing well and those that might be struggling, which in turn will encourage cuts to be made where performance is lagging.

Removing parts of the business that are no longer serving the company well can be a difficult task as it often means staff redundancies. Recovery advisors have the experience to navigate this territory in the most sensitive way and their guidance will ensure that the process is as streamlined and smooth as possible.

Company Voluntary Arrangement
If your limited company is insolvent, it can use a Company Voluntary Arrangement to make payments to creditors over a fixed timeframe. The arrangement usually lasts for 3-5 years and it’s a helpful tool for companies that have the green light to move forwards but have struggled with the burden of historic debt.

Accelerated sale of the business
Accelerated transactions are usually driven by events and urgency. They are often given specific deadlines which shorten the time available for someone to buy the business. This type of transaction can present unique challenges and opportunities, which calls for an advisor to create a tailormade approach to each case.

If all other options have been explored, liquidating the business is the next step to take. This will undoubtedly be challenging but, with the right advisor, can be made as smooth and straightforward a process as possible. Liquidating a business involves selling off all assets, paying off all liabilities, and distributing any remaining funds to stakeholders.

It can be a complex and draining route to go down, but with the right professional advice and regulations met, clients can move on.

In the Southwest, we are seeing an increase in enquiries with insolvencies and recovery cases. Our advice for business owners is to speak to their accountants and advisors regularly on the options available. Successful recovery can lead to a stronger and more resilient company that is better equipped to weather future challenges.

If you need support, or just want to talk through your options with one of our experts, 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

Steve Elliott