First signs of distress and reluctance of admitting failure
Should no action be taken towards understanding the underlying problems that the company is facing then it can be a very slippery slope that can lead towards the insolvency zone.
First signs of distress include cashflow problems, extended debtor or creditor days, increasing staff turnover, declining staff morale, high interest payments and defaulting on bills.
It’s often difficult to detect them. Some individuals within these organisations might sense them, but their voice is not necessarily heard or doesn’t want to be heard higher up the ladder. This is one of the reasons why businesses may fail. In many cases owners/management don’t want to admit, or fail to see, issues. They may try to solve the matters on their own, without consulting the specialists.
Business recovery and insolvency practices – taking a proactive approach
Insolvency has negative connotations. Owners, directors and managers may associate it with failure. They may not appreciate that employing an insolvency practitioner can save their business, providing that they are consulted in time.
It could therefore be argued that business recovery and insolvency practices should be more proactive in identifying and approaching companies that need help. Early identification of companies in distress or with the potential of distress could offer those struggling businesses more options, rather than starting a formal insolvency procedure straight away.
How can business recovery/insolvency practices identify struggling companies?
The answer would be an ‘early warning’ alert system designed specifically for business recovery and insolvency companies, such as the one developed by Jordans.
Our product, InsolvencyWatch, accesses a database that holds a variety of information on over 4.2 million live UK Limited Companies. We consider information that could be of interest to business recovery and insolvency practices, information that could be used to identify and target businesses in early distress stages and provide daily updates on those companies.
Our system can notify you of key alert changes such as a defined negative change in credit score, CCJ filings, late filings of accounts, filings of petitions and winding up orders and potentially adverse director activity. InsolvencyWatch has a capability to tailor results to specific business sectors or postal codes, making it easier for business recovery and insolvency practices to approach companies in early financial distress, before it becomes critical.
Benefits for struggling companies and insolvency/corporate recovery businesses
There are some clear benefits for both parties. By taking a proactive approach, business recovery and insolvency practices have an opportunity to not only gain new clients and drive revenue for their business, but also obtain a reputation of a business who helps others and makes a positive impact to the local or national economy.
In terms of companies in the initial stages of financial struggles - the earlier they speak to the experts, the more chance they have to take a turn for the better.
To find out more about InsolvencyWatch service, get in touch with Jordans business information team here on 0117 918 1364.