Why and How to Prevent Bankruptcy
No business likes to think of failing, but it’s a statistical fact that many do. While filing for bankruptcy doesn’t necessarily mean that you will have to close your doors, it doesn’t bode well for the future of your business. If you have to file Chapter 11, you’ll likely need to hire a lawyer, and your credit record will suffer. To avoid these headaches, here are several ways steer clear of bankruptcy.
Any business, whether considering bankruptcy or not, should be looking for the means to curb spending. Are there non-essential or redundant items that can be eliminated that can free up some cash flow? Identifying these items should be an ongoing exercise.
Identify Troubling Issues
A business that is facing potential bankruptcy is usually in that position because of either financial or operational mismanagement. Identify the troubling issues so that they can be addressed immediately. If the problem was unavoidable, then just mark it down as a learning experience.
Communicate with Creditors
While no one enjoys asking for help, creditors understand that businesses run into difficulties at times. In fact, creditors would much rather work with you to negotiate a payment plan than have you file bankruptcy where they will end up with nothing. Contact your creditors and courteously ask for accommodations.
If you have a lot of debt payments, you’ll need to sit down and prioritize them. Pay off the loans or debts that are charging the most interest first. You may also wish to see if you can consolidate some of your loans. The fewer checks you’re having to send out each month, the lower your chances of default and having to file bankruptcy.
Businesses today run into tough times on occasion. Careful planning, tight financial controls, and a strong relationship with creditors can help avoid bankruptcy for your business and the pitfalls that go along with it.
Flipside Capital offers alternative financing solutions for businesses in nearly any circumstance. Contact us for more information or to request a free consultation.