A Look At How You Can Repay Creditors Easily And Stress Free

Sometimes, despite the best of intentions, a company can run into financial difficulty and have a long list of debts that need paying off. If this happens to a business, it can be arranged for them to undertake a Company Voluntary Arrangement (CVA) that allows the business to continue operations while they work to pay off their debts. In order to establish whether a CVA would be viable, a business plan would need to be submitted that includes future cash flows. There are a number of UK companies that participate in a CVA in order to get themselves out of financial trouble and continue trading, and here are some of the reasons why.

Business As Usual

Generally, a business that is in debt can go bankrupt or into private ownership, meaning that they no longer have control of their own affairs. An advantage to CVA is the fact that it allows the company to continue trading as they usually would. In other circumstances, the bank accounts of a company would be frozen in the event of liquidation, but a CVA can help to obtain a validation order so the banks can then reopen their accounts and carry on with business as usual. It is also key that the company’s director is still in charge of all major decisions, as there is nothing more frustrating than that power being in somebody else’s hands. At a time when a company is in trouble, only industry experts are best positioned to restructure the company and steady the ship.

Reshaping The Business

If a company runs into trouble, it is important they get the time to evaluate what went wrong, restructure the business and avoid it happening again. Only with a CVA is a company given the time and breathing room to completely restructure the business and ensure they are in a stronger position to make a profit once they have paid off all debts. Company directors will also have access to a business rescue team, as part of the CVA, who have experience in restructuring businesses and formulating a viable business model. It also very beneficial that you can restructure the business while carrying on with the day to day running of the business.

Cash Flow

By taking advantage of the time to restructure business, companies that have undertaken CVA’s have proven to be more profitable afterwards. Through a CVA you can negotiate a percentage to be paid back to creditors allowing you to have enough cash left over to pay your staff and overheads as you navigate your way back to profitability. The business rescue team, that company managers have access to, can be very helpful in finding new ways for the business to be profitable, both during the rescuing period and for the long term future of the business after all. They can also help to free up any money that could be tied up in the business, and it can then be used as operating capital.