No company wants to enter administration, but sometimes it’s the best option you have available. In fact, prompt action and a swift decision to enter administration can often be the reason that a business can be salvaged from its financial problems. Read on to have the company administration process explained and to find out more about the key signs that you need to be looking out for to decide if it’s right for you.
What Is Company Administration?
Company administration is an insolvency process geared towards helping the business recover as much as possible, with a view to securing the best possible outcome for the company’s creditors. This is done by a licensed insolvency practitioner, who will take the role of the company administrator in charge of running the company. Administration provides immediate legal protection from creditors for the company, buying crucial time to form a solution.
Key Signs That It’s Time To Start The Company Administration Process
You’re Experiencing Long-Term Cash Flow Problems
Persistent cash flow issues are often the first sign you have that it might be a good idea to pursue the company administration process. If your business is regularly struggling to make all of its payments and having to take loans to provide breathing room, it might be best to go into administration.
Mounting Pressure From Creditors
Once creditors start putting pressure on businesses, it can quickly get past the point of no return. Administration provides a period of legal protection to prevent creditors from taking action against you while you pursue a solution.
Loss Of Vital Revenue Streams
The sudden loss of a major client or other source of income can place you very quickly into a precarious financial situation. If your company’s viability is on the line, administration could help you get through the transition.
Inability To Service Debt
If you’re defaulting on your debts, lenders will start putting pressure on your business and calling in loans. The company administration process can allow you to restructure and refinance to find a way to meet your payment obligations in a timely and sustainable manner.
You Need To Act Early
The longer you wait, the more risk you place yourself into and the more your options become limited. By choosing to act decisively early, you can better protect your company from legal action, preserve more value in your business, potentially save jobs and avoid personal liability from wrongful trading.
Speak To The Professionals
If you’re concerned about your company’s financial future or need more information on the company administration process explained to you, then don’t hesitate to get in touch. Our experience as insolvency practitioners at Ballard’s Business Recovery allows us to deliver a tailored service designed to make the company administration process as easy as possible for all parties involved.
