It is very easy to get into debt problems for anyone running a business. Depending on what you do, there may be business customers that let you down and not pay bills on time. Then you start running into cash-flow problems and it simply escalates from there. The worst thing that you can do is ignore the problem and not look for debt solutions.
Your creditors can initiate business liquidation and even report you to ASIC as trading insolvent (criminal offense).
There are some actions that you are able to take to assist you to repay business debts and achieve financial recovery.
Informal negotiations with suppliers
If you are chased by suppliers and other creditors waiting for payment, make a realistic assessment of how much you will be able to pay them and when. Then contact them and attempt to reach an informal arrangement under which you will slowly begin to repay your debts. It is in their interest to talk to you as the alternative may result in your bankruptcy and larger losses for them.
Make sure that you keep up your end of any arrangements made, or else there may be serious repercussions. Creditors that lose faith in you may push you into liquidation and force you to close your business.
Sell debts at a discount to generate cash-flow
If you outstanding debt and your debt problems are resulting from others not paying you on time – try to sell your debts at a discount to businesses that acquire debts. You will get rid of a headache as well as generate some cash flow to allow you to keep on paying your own bills.
Liquidate available business assets is a debt solution option
Try to sell business assets that you may have is the way of debt solutions. Remember that if your creditors push you into bankruptcy, others will manage the sale of your assets and may not achieve the level of resale results that you could obtain by managing the process yourself. Also, by doing that, you save on the extra costs of paying for a liquidator and/or administrator that courts may appoint to liquidate your business assets.
Refinance property loans
Alternative source of funding may be a loan against your home or an investment property. There may be some available equity if your loans are low that you could access and lend to your business to cover urgent debts.
Bankruptcy is a debt solution option
If you have tried every every available alternative and there is nothing that you are able to to raise the required funds to repay everyone, voluntary liquidation may be a reasonable alternative. It will at least allow you to select the liquidator that will handle the process and protects you form “trading while insolvent” charges which can be brought against you by ASIC.
Seek professional advice if in doubt
Consider all available strategies, however it is important that you understand the legal position you place yourself in as a consequence of your choice. Seeking appropriate legal advise is very important to ensure that your choice does not result in a financial loss as well as a jail term.