Identifying and Addressing Company Financial Distress

When a company begins to struggle with cash flow, there are several early indicators that directors should be aware of. A common sign is the failure to pay HMRC liabilities such as PAYE or VAT. In other cases, the business may fall behind on contributions to the pension provider. Directors who once generously rewarded staff with bonuses may find that they can no longer afford to do so, and it is not unusual for directors themselves to forgo remuneration in order to preserve company funds. Each of these situations reflects a business in financial distress and signals the need for timely professional intervention.

Seeking Professional Support from an Insolvency Practitioner

The appropriate step for directors facing these challenges is to seek advice from a licensed insolvency practitioner, like Molly Monks. I will begin by reviewing the company’s financial position in detail, assessing its assets and liabilities, and preparing an up-to-date balance sheet. I will then analyse cash flow forecasts to understand the current position and determine whether adjustments can be made to improve the position.

Working with Creditors and Negotiating Solutions

Alongside this financial review, discussions often take place with creditors, including suppliers, landlords, and HMRC, to negotiate repayment plans such as Time to Pay arrangements. A further aspect of the process involves developing a business plan, which may include resizing the workforce, streamlining operations, or closing down loss-making parts of the business.

Free Consultations and How Fees Are Applied

Initial consultations are free of charge and are not limited to a single meeting. The aim is to work with directors until a clear and achievable strategy has been agreed upon. Once that strategy is in place and implementation begins, fees will then may apply. These fees are usually covered by the company itself, using available cash at bank or by selling assets such as vehicles or stock. Where the company has no assets or reserves, responsibility for paying these fees may fall to the directors personally.

Costs of Engaging an Insolvency Practitioner

The cost of engaging an insolvency practitioner varies according to the nature and complexity of the work required, the size of the practice, and its location. Larger firms with city-centre offices and extensive staff may charge higher fees. At Parker Walsh, the aim is to keep fees as low as possible. The firm operates with a friendly team of around 13 members of staff, with Molly Monks being the sole insolvency practitioner, and Parker Walsh does not carry the overheads associated with expensive offices. Despite this, Parker Walsh is able to deliver services nationwide, combining competitive fees with personalised, professional support.

The Importance of Early Action

Financial distress, if left unchecked, can quickly escalate into a crisis. Recognising the warning signs early and seeking timely professional guidance offers directors the best opportunity either to stabilise their business or to manage an orderly closure. Parker Walsh provides both the expertise and the practical strategies needed to navigate such difficult circumstances.

‍