Insolvency Advice - Don't leave it too late

Regulation

and early intervention is the cure.




I
find it more often than not of late, that I am introduced to speak with directors’,
their accountants and/or business advisors at an ever later stage in the
advisory process, which unfortunately results in a formal insolvency procedure
being the only option as opposed to the option of last resort.




Having
also seen an increase in the number of unregulated company “advisors”, it is
very relevant for those receiving any advice to ask themselves this simple question:




“If my relative or family
member was ill or unwell and required some form of intervention, would I rather
utilise the services of a back street Dr. with his fancy flashing neon signs
offering no frills at rock bottom prices, with no regulatory body to monitor or
control those practices; or would you rather have the security and peace of
mind of knowing that the Dr. who would be undertaking the work was a member of
a licensed body, was regularly inspected and regulated and was providing expert
training to those operating within his practise.”




Obviously
we all know which option we’d choose, and to be frank is the right option.




However,
I am becoming more and more increasingly alarmed at the number of directors’,
accountants’ and business advisors’ who have sought advice from the “dark-side”;
that is, the phenomenon of the unregulated advisor; and/or those who have deferred
seeking advice to the very last stage when the wolves are at the door simply
clinging on to the hope that things would simply get better.




When
I discuss this very issue with local accountants, I often also pose this
question to them:




“If you were to advise your own
client whether it was better to use a qualified/regulated accountant or a
non-regulated/non-qualified accountant what would your answer to them be?”




As
you can imagine the response received is always the former, as they too value
the importance of regulation and being supported by a firm that operates under
the umbrella of a professional licensing body.




With
any service provided within the financial services arena, I always stress to
clients the sometimes overlooked importance of this very point. Whilst the unregulated
advice may sometimes, in the loosest sense, be exemplary and correct, there is
always a risk that things may not work out as intended or anticipated. In these
circumstances where do you, or do you advise your client to go to, to rectify
the position or make a complaint to follow up any grievances?




No
doubt your once, friendly, unregulated advisor, or in the instance of the backstreet
Dr., has probably already shut up shop and opened a similar venture in a
backstreet in a new part of town. Whereas, by seeking advice from a regulated
professional, there will always be recourse on the advice sought. Similarly,
the earlier you speak to a professional advisor the more likely it is that a
turnaround can be achieved and that there is a significantly improved position
in terms of the likelihood of a rescue or better result for all interested
parties involved.




So
when reviewing or assessing a company’s performance or financial health, either
through introspection or when looking at the outside market, please consider
whether the company subject to the review is demonstrating any of the
following, but not limited to, symptoms:




1:
The Company is continually loss making;




2:
There are poor relationships with the existing bank and/or they are unable to
secure additional lending;




3:
No or limited access to alternative sources of finance;




4:
Suppliers are placing the debtor on cash on delivery terms of trade;




5:
Creditor days have extended beyond the usual terms of trade; or payment methods
are being changed (the issuance of post-dated cheques for instance);




6:
Payments are being made to creditors of rounded sums, which are irreconcilable
to specific invoiced amounts;




7:
Inability to produce timely and accurate financial information to display the Company’s
trading performance and/or they are unable to make reliable forecasts;




8:
The Company receives Solicitor letters, summonses, judgements or warrants.







The
key to any business survival is not only about receiving the right advice, from
a qualified professional, but it is also about receiving that advice at the
right stage in the process, tailored to the individuals concerned.




So
if you are a director of a company experiencing any of the above symptoms; or
if you are an accountant or business advisor and have concerns about your
client’s financial health; it is far better to seek professional advice in an
open and friendly manner at an early stage so that every option can be
explored.




The
alternative to this is to bury your head in the sand and wait for the dark lord
to appear, and trust me he will come knocking at your door… you have been
forewarned.










In
the event that you wish to discuss any aspect of the above article, or in fact
you have a client who may benefit from an initial, free, without prejudice
discussion, please call Anthony Ford on 01202 830 002 who will be more than
happy to deal with your enquiry.