ADVICE is the all-important watchword for many businesses that may be leaching cash but whose directors refuse to heed the early-warning signs that may ultimately take it down the road to insolvency.
The time to seek advice from corporate recovery specialists is at an early enough stage when you think performance of the business is below par and requires more than just a minor adjustment.
When advice is sought in good time there is a real p
ossibility of avoiding insolvency, but once the likes of a winding-up petition has been served, the chances of giving a business the kiss of life are decidedly remote.
We are seeing a broad range of sectors affected amid the current downturn (I deliberately avoid using the dreaded "recession" term) but come 1 January, "Happy New Year" will sound decidedly hollow to those businesses already showing symptoms of a chill that might just turn into pneumonia.
The stark fact is that many of these firms might well have been saved had they sought specialist advice. Business rescue, recovery and restructuring are what we are about, it is only as a last resort that we need to initiate some form of insolvency procedure. The problem we frequently encounter is denial on the part of MDs and FDs that they are rapidly getting out of their depth and in danger of drowning along with the business.
Wherever possible, we help firms find the best solution that allows for positive steps towards financial recovery, thereby protecting livelihoods.
We remain optimistic that many sectors of the economy will remain strong and, where possible, will help businesses stay operational, but the key to this is early involvement which allows the business to retain some control over its future – as opposed to outside forces beyond its control, should there be no viable solution to its financial predicament.
Sometimes the person steering a business will regard seeking advice as a weakness and continue to "hang on in there", refusing to face the truth. It may be that one weak division is siphoning off resources. Its disposal may well ensure the survival of the rest of the business.
It could be that there is no alternative to a firm's insolvency, but it may be possible to avoid this outcome with the help of professional advisers with relevant experience who can look at the broader picture.
The full article contains 403 words and appears in The Scotsman newspaper.
