Insolvency is not being able to pay your accounts on time and in full,
and is probably the most stressful situation a business owner will ever
What most people don’t realise is, that it is in fact, a very common occurrence affecting all entrepreneurs at some point in their business lives. Some famous multi-billionaires have even been declared bankrupt at some stage.
So there you have it, you are not alone, it happens to everybody!Debt Restructuring DIY
The most important thing to remember is that, if you find yourself in this situation, you can manage it through effective, open communication and a clear commitment to payment deadlines.
While no creditor is too happy about not being paid on time, they will be more agreeable and withhold the lawyer's letters if you follow some very simple guidelines.
1. Cash Flow - Have an honest look at your cash flow and calculate the absolute minimum amount of money you should receive each month.
2. Monthly Payment Schedule - With this amount in mind look at who you owe and how much and then prepare a schedule. This must clearly indicate over what period you can settle the outstanding debts.
3. Communication - Communicate the schedule repayment terms to all your creditors. Yes, some of them will not be ecstatic and will still threaten you with legal action, but don’t worry, stick to your guns.
4. Commitment - Stick to the amounts and dates as per your payment schedule! If you ever find yourself in a position that you cannot meet these terms let your creditors know.
Make every attempt to honour the repayment schedule. Do this even if it means reducing the amounts paid, albeit temporarily.
Insolvency litigation is expensive
So there you have it, four very simple steps to get yourself out of your financial predicament!
It is important to remember that the majority of creditors would prefer to avoid the use of litigation as it is costly and very often does not yield the results they expect, leaving them with an unpaid debt and a hefty lawyer's bill.
Therefore by being proactive and communicating with your creditors you will buy time to restructure your debt. By honouring your commitments you will build credibility with them.
Also don’t forget, your creditors have bills to pay too and will be relying on your monthly repayments to ensure that they too do not get into financial trouble.
Do you need our help?
If however you find yourself in deeper trouble than this, you have better options that do not automatically mean financial ruin. Speak to us about Business Rescue and Debt Restructuring for your company.
We’ll properly advise you of your options and do everything we can to protect you and your business.