Insolvency Services

Insolvency Business Briefing

Think Insolvency. Think Savants.

During these challenging times, it is important for businesses to be able to know exactly where they stand financially. Whether a company is solvent or insolvent is a call of the directors, one that MUST be answered with honesty and integrity.

To get an accurate picture of a company’s position you have to consider the Cashflow and Balance Sheet calculations that can assist in determining what position you are in & quickly. The result of these tests is you will be able to definitively understand your company’s required actions; ultimately answering whether you can pay your debts as they fall due. 

The first test looks at your Balance Sheet, this is the ‘contents page’ of a business & the Directors have responsibility to know this inside out. When compiling balance sheet data, the Director must answer the requisite questions as truthfully as possible or otherwise may face serious consequences.

The balance sheet test is simply pitting your assets against your liabilities. Assets can be anything from cash, property, machinery, stock, debt book etc & your liabilities are anything you owe to suppliers, HMRC, creditors etc. Assets must exceed liabilities which essentially means you can pay what you owe. 

The Cash-flow test is the most simple, are you able to pay your everyday bills when they fall due? This is a short term question but of course if you are able to look ahead this may mean you can take the steps required to mitigate insolvency proceedings, always seek advice well ahead of time.

It is important to highlight that trading while insolvent is serious and can carry severe action to be taken against a company and its directors.

Are you or your company facing financial challenges? Savants has a team of insolvency experts that can guide you through a range of options navigating you out of your current situation. Call our Emergency Hotline today on 0800 861 1151 or Visit Our Website and get free no obligation advice today!

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