Addressing cash flow concerns with a CVA
Businesses facing cash flow or other financial issues should act quickly to overcome the problems they face.
However the range of support on offer can be daunting, which is why businesses need to get a handle on their operations as quickly as possible.
Refinancing, agreeing new terms with suppliers and a range of alternative finance options are just some of the options available.
In instances where cash flow issues exist and all over avenues have been exhausted, a business may consider a company voluntary arrangement (CVA).
Provided that a business is still viable, and that it’s possible to prove future profitability, using a CVA could help to restructure and cut costs in an efficient manner.
This agreement sees an agreed amount of money paid back to creditors over a specific time frame, although it needs to be managed by an insolvency practitioner.
All directors must agree to the CVA proposal and 75% of creditors will need to approve it too.
Meanwhile a failure to agree a CVA or to meets its payment terms will ultimately result in the company facing liquidation or a winding up order.
The key for any business facing financial hardships or cash flow issues is to act quickly as this increases the number of potential insolvency and restructuring methods that could be used.
Businesses should seek appropriate advice and guidance on the best way to proceed, or may want to consider an independent business review in order to develop a strategy for a more financially secure future.
By failing to act, a business risks insolvency or other issues in the future, while it may also struggle to meet any growth aspirations if it is unable to prove it operates in a stable manner.
By Phil Smith