Any business facing financial challenges will likely be concerned about what steps they need to take going forward. For businesses facing these kinds of challenges, or looking to wind down their operations, it’s generally necessary to use the services of an insolvency practitioner. If you’re a small business looking for assistance in these matters, then here’s what you need to know about insolvency practitioners.
What actually is an insolvency practitioner?
An insolvency practitioner is a highly trained, qualified professional who specialises in taking companies through financially challenging processes and times. They’re experts in insolvency law and accounting, and will be able to inspect your business’s financial health and suggest what solution you’ll need to choose to get out of that situation.
If the insolvency practitioner finds that your business is insolvent, they’ll be able to dissolve the company and sell off the assets, distributing the proceeds to creditors according to the legal order of priority.
In the UK, insolvency practitioners must generally be members of one of two relevant professional organisations – the Insolvency Practitioner Association (IPA) or the Institute of Chartered Accountants in England and Wales (ICAEW). Once a member of one of these organisations, they can then join a specialist service provider such as Chamberlain & Co.
When looking for an insolvency practitioner, ensuring that they’re a member of one of these organisations will be part of your due diligence. It’s important to get this right, or you could end up getting your business in even more trouble.
Returning a business to a state of financial health
While in some cases, it might be necessary for an insolvency practitioner to wind down a company and sell off its assets, this will only be done where there is no chance that the business can recover.
Where possible, an insolvency practitioner will create a plan to return your business to a state of relative financial well-being, to maximise the chances that you’re able to repay your creditors in full. As a result, it can often be better to reach out for assistance sooner rather than later, so that they can maximise the chances that your business will be able to continue operations.
Costs associated with an insolvency practitioner
As insolvency-related issues can vary so much, there will typically be no fixed cost. There may be a flat fee, and then additional costs that are added based on the amount of work done. During your initial consultation with the insolvency practitioner, they should clearly lay out their fees to you, so that you aren’t hit with anything unexpected later down the line. In some cases, their fees may need to be paid from the sale of assets of the company.
Hopefully, this will have cleared things up a little bit. As a small business, going through financial difficulties can be particularly stressful. Insolvency practitioners can be an excellent source for further advice, and it’s always best to reach out for help sooner rather than later.