Business Struggles during COVID-19


If you own your own business, you may have encountered times when finances (particularly cash flow) have become a problem. A lot of business owners ignore the problem until it is too late, rather than ask for a professional advice early on. It helps to know the early signs of insolvency so that action can be taken to avert a crisis. These signs include: operating at bank credit limit, under pressure from suppliers, loss of significant customers, shrinking profit margins, depleting rainy day fund, forced to cut non-essential business expenses, conducting asset sales to generate short term cash flow, struggling to pay employees and considering laying off staff.

Consider talking to your banker early on to determine if they are offering interest-only payments or extending additional loans (including line of credit) to help through the difficult time.

This may also be a good time to evaluate available government subsidies, in terms of suitability and cost (such as personal guarantees and future repayments).

If the business has lost significant customers, ensure a follow-up is done to find out the cause and develop a plan to regain their confidence. Look at alternate distribution channels to gain new customers to improve cash flow. A plan should be developed to focus on key products and services, including strategies to improve their quality and reduce inventory, reduce direct costs utilizing robotics, and improve profit margins.

Ensure your business records are accurate and up to date. Consider hiring a professional accountant as a consultant to review your financials and offer advice on what is needed to turn the business around.

Cash flow projections should be made weekly if your business is struggling to pay its bills. Spending should be adjusted monthly to stay on budget overall if revenue targets are not being met. Try to build up your rainy-day fund up to at least a 12-week cash reserve.

It is a good idea to review all your options with an insolvency professional. It might be possible to find a business partner, merge with another similar company, form a strategic alliance for referrals, or negotiate a settlement with your landlord, shareholders, and creditors. An insolvency professional can also help file for protection under the Companies’ Creditors Arrangement Act (CCAA) or the Bankruptcy and Insolvency Act.

To discuss your business, please contact K & E Professional Accounting Associates. You can visit their website at https://www.keprofessionalaccounting.com/ .

For SEO Purposes: #businessinsolvency # insolvency #bankruptcy #preventingbankruptcy #CCAA #accounting #Canada #taxreinvented #cashflow #profitability @kliuaccounting @KEProfessionals @emeraldtreeaccounting

Featured Posts
Recent Posts
Archive
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

"It is our passion to be your service provider of choice!"

CONTACT

Telephone: (204) 202-3786

Toll-free: (888) 308-3888

Fax: (204) 202-3856

INFO & TOOLS

K Liu Accounting Services Inc.

Island Lakes, Winnipeg, Manitoba

R3X 2C5

STAY CONNECTED

  • Twitter - White Circle
  • Instagram - White Circle
  • LinkedIn - White Circle
  • Facebook - White Circle

LIKE & FOLLOW

K Liu Accounting Services Inc.

for Tax Tips, Up-to-date Announcements,

APP Integration Products & Special Offers!

  • Facebook
  • Instagram

© 2008 by K Liu Accounting Services Inc. All Rights Reserved.