Turnaround & informal arrangements
Turnaround & informal arrangements can provide an effective debt avoidance strategy if effectively managed. Businesses of all types suffer a downturn in trading at some stage either through the loss of a key customer or cyclic economic conditions. If you are confident in the product or service being supplied and believe that the business does have a future then adopting this approach could be the solution.
Taking the formal approach will require the help of a turnaround specialist to achieve the required outcome. Planning and implementing the required corrective action such as company and capital restructuring, reducing costs, concentrating on core products, sale of part of the business, and increasing financial control can help towards making the company profitable again.
Taking the informal arrangement route requires contact with key creditors and it is essential to gain their support for the business going forward. An honest explanation of the cash flow situation with a planned time scale for repayment will give confidence to the supplier. Keep them in the loop at all times.
- Plan the cash flow
- Keep major creditors advised of your situation
- Review the plan and adapt to circumstances
- Consider other options if the position does not improve
Follow the links below for further detail on other debt options for sole traders and partnerships: