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6 Business Debt Solutions You Should Consider

Running a business can be very stressful. It becomes even more difficult to manage cash flow, especially when your suppliers insist on prompt payments and your customers do not pay their invoices on time. Cash flow is the lifeblood of any business. Without proper cash flow management, businesses may find themselves short of funds, and it is common for these financial issues to accelerate, resulting in a vast amount of business debts. If you are in this situation, it is imperative you contact a professional business debt adviser, to help you get your finances back on track.

If your business, whether a sole trader or a limited company, is struggling with its financial obligations, it does not mean that you cannot continue to trade. If your business is viable, there are many business debt solutions you can use as you continue trading. However, if the business is making huge losses, then you should consider closing it since trading while you are insolvent is likely to just increase your debts.

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How We Can Help With Business Debt Solutions

  • We Will Contact The Enforcement Agent On Your Behalf.
  • We Will Aim To Stop Any Further Bailiff Enforcement Action.
  • We Will Contact The Local Council On Your Behalf.
  • We Will Provide You With You Available Debt Solutions And Look To Set Up An Affordable Repayment Plan.
  • Free Impartial Advice.

More than one in four callers (26%) to National Debtline now have council tax arrears, up from just 14% a decade ago. This is also one of the fastest growing forms of debt we are seeing – and rising council tax bills mean this trend is likely to continue.

 
SOURCE - WWW.THEGUARDIAN.COM

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What You Should Know if You Can’t Pay VAT

Value Added Tax (VAT) is a tax on consumer expenditure in the United Kingdom. The tax is collected by business owners from their customers when they buy your goods or services. As a business owner, you are responsible for paying the collected amount to the HM Revenue and Customs (HMRC) before the stipulated deadline. If you do not meet the VAT deadline, you will be subject to paying interests on top of the VAT bill. Additionally, if you miss more deadlines the penalties will increase further.

If you can’t pay VAT on time, it means that something is wrong with your business. Even though HMRC is considered a creditor in an insolvency situation, failure to pay VAT on time is risky as it can result in the downfall of your business. If you are a sole trader, VAT arrears are considered personal debts. This means you can leave your family home vulnerable if you are considered insolvent. 

For Limited liability companies, tax arrears are a good indication that the company is insolvent. If a company continues to trade, its directors may be held personally liable for company debts.  Whether you are a director of limited company or a sole trader, it is important that you contact the HMRC early as soon as you realise you have a cash flow problem. Here is all you should know if you can’t pay VAT on time.

Need help? CALL US NOW ON 0161 266 266

5 WAYS WE CAN HELP WITH VAT Areers

  • We Will Contact The Enforcement Agent On Your Behalf.
  • We Will Aim To Stop Any Further Bailiff Enforcement Action.
  • We Will Contact The Local Council On Your Behalf.
  • We Will Provide You With You Available Debt Solutions And Look To Set Up An Affordable Repayment Plan.
  • Free Impartial Advice.

More than one in four callers (26%) to National Debtline now have council tax arrears, up from just 14% a decade ago. This is also one of the fastest growing forms of debt we are seeing – and rising council tax bills mean this trend is likely to continue.

 
SOURCE - WWW.THEGUARDIAN.COM

Call Us Now On 0161 266 266

Business Debt Solutions

  • Company Voluntary Arrangement (CVA)

If your struggling business is still viable and may become profitable again, and the directors are ready to continue, then a Company Voluntary Arrangement (CVA) may be the best debt solution for you.  A Company Voluntary Arrangement is a legally binding agreement that enables the company to repay its outstanding unsecured debts over a specified period of time, usually 5 years.

CVAs have been part of the United Kingdom Law, since 1986. They are one of the most popular business debt solutions. The process of a CVA is similar to that of an Individual Voluntary Agreement. The only difference is that a CVA is specially designed for limited liability companies. For a CVA proposal to be approved, at least 75 percent of the creditors must agree to its terms. A company can qualify for a CVA when:

  • It is insolvent
  • Has engaged an qualified insolvency practitioner and can prove that the business will continue being viable in the future

Like an IVA, a CVA enables you to avoid the increasing interest charges as all interests and charges on your debts are frozen so that the amount the company owes does not increase. Rather than struggling with unaffordable debt payments to many different creditors, a Company Voluntary Arrangement allows you to make a single affordable payment.

 A CVA is a viable option if you are looking to stop a winding up petition. Since the company has avoided liquidation, the conduct of the board of directors may not be investigated. In addition, at the end of the CVA period, any remaining debts may be written-off. In some cases, the CVA period may be extended to address any remaining debts depending on the terms of the CVA.

  • Company Administration

Company Administration is another alternative to liquidation. It is a formal procedure where a licensed Insolvency Practitioner is appointed to act as the administrator of the insolvent company. The primary reason for this is to bring about a recovery.  With a company administration, all the legal actions being taken by the creditors are immediately stopped, meaning that the company is protected against the possibility of liquidation and other negative legal actions during the administration.

During the administration period, the company is left in the hands of a qualified IP, who acts as the administrator. This helps to ensure that any action taken during the administration is done with the interest of the company and its creditors in mind. During this period, the administrator can propose a Company Voluntary Arrangement depending on the given circumstances. A company administration keeps the financial position of the creditors from worsening.

A company can enter into an administration if:

  • The company has little assets and does not have sufficient cash flow
  • The company is insolvent or contingently insolvent and has a considerable amount of assets or value. The profitability and the cash flow of the company must be reasonably predictable.
  • Creditors are putting pressure to have their money paid and there is a concern that the company could be taken to court in the near future.

The directors of a company may voluntarily enter into an administration with the help of a qualified Insolvency Practitioner.

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  • Commercial Debt Management Plan

  • A commercial debt management plan is flexible plan that allows a company to repay all its debts at a more affordable rate. During this time, a company may be allowed to continue trading. A commercial debt management plan, does not however, give the company protection from legal action or additional interests and charges.

  • Business Debt Arrangement Scheme

  • A business debt arrangement scheme allows a business to pay back its debts in full, but at a lower interest rate and over an extended timeframe. A debt arrangement scheme freezes all interest and charges on the outstanding debts as the payments are being made. It also prevents creditors from taking further legal action against the company.

    If you’re a sole trade, all your unsecured debts, including business and personal debts are considered personal debts, meaning you can only apply for a normal debt arrangement scheme. If you are trading as a partnership or a limited liability company,   you will need to enter a Business debt management Scheme. 

    Unlike normal DAS, a business debt management scheme lasts for a maximum of 5 years. Thus, you will need to repay all your unsecured debts within this timeframe. You can continue trading while in a Business debt management scheme.

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  • Sequestration

If the directors of a company petition for its own sequestration or if the creditors petition for the company’s sequestration, the company will no longer be pursued by the creditors for its unsecured debts. However, the business could be sold for the benefit of the creditors, which is likely to make it hard to continue trading.

  • Protected Trust Deed

A  Protected Trust Deed is an ideal business debt solution for any kind of business, including limited companies, partnerships and sole traders.  It is usually an agreement between the business and its creditors whereby the company agrees to pay a percentage of what it owes and the creditors will write off the rest of the unsecured debts. The business will be required to pay the outstanding debts for a specified period of time, which in most cases is usually 4 years.

These are just some of the most popular business debt solutions. If your company is struggling to pay back its debts, it is imperative you contact an experienced business debt adviser. The adviser will examine the financial situation of your business, and recommend the most viable debt solution.

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