According to the latest Red Flag Alert research for Q2 2020, seven consecutive quarters of increased financial impairment has been recordedThis results in them a record of 527,000 businesses in significant financial distress by the end of June 2020The financial distress has shown to rise much higherthe court activity has not reduced due to Coronavirus pandemicThe pandemic has, in fact, reduced the number of Country Court Judgmentswinding up petitions that are taken against the indebted companies.

The significant distress is majorly for those businesses with minor CCJs claiming for debt repayments of less than  £5,000, or for those who have been identified by the credit risk scoring systemThe credit risk scoring system considers the financial ratiosindicators which includes the working capital, contingent liabilities, net worth,retained profits.

Creditor pressurelate payment penalties also could be very stressful for the businessesdepending on the severity, the options for the company to stay away from insolvency could be fewThe realistic prospect of recoveryaction would be taken quicker than we realizeThe three major business recovery options are –

Funding And Cash Advances

Invoice financing is one of the best waysWhen the company or individual can increase the cash flow by raising a lump sum of capital as quickly as possible for reinvesting it into the businesssupporting the ongoing trading – use the invoice financingRaise the funding through the flexible loan secured against the unpaid invoicescompany assetsAn invoice finance provider can advance you up to 95% of the value of the unpaid invoice or company assetWhen the client settles the invoice, the provider can collect the balance from you that includes a small feeIf the financial invoice is carefully managed, it can help you with the best cash floweven halt the pending legal action against youAnother way to boost your business cash flow is to find a private lender who can give you a business loan.

Company Voluntary Arrangement (CVA)

A company voluntary arrangement allows the company to agree with creditors on how debt would be repaidIt creditor may provide the option for partial or full repayment, depending on the company’s status for repaymentThe equivalent process for the sole trader is termed as the Individual Voluntary Arrangement (IVA)Contact 4R Business Recovery for more details in CVAIVA,get the best advice on how to reduce your debt burden.

Company Restart

Company Restart is the step which involves the process of starting afresh without the debt when the company fails for the fundraising or CVA, the next step to do right is the company restartIt is the procedure where the existing company is closed,during the process, the directors purchase the assets to be traded on in a new companyCompany restart is as a resort as the original company closesthe assets, employees,clients can be retained for the new business.

Contact 4R Business Recovery to discuss your financial distressthe business recovery options that best suits youWe are here to help you to solve your problem, just the way you need 4R Business Recovery to provide you with the best business restructuringreducing the debt burden, extending the payment terms for up to 5 years.