Trading Out

Advice on trading out of business problems

Money Advice Direct can provide advice on the best way to approach a company’s creditors and organise its repayments and so begin actively trading out of the adverse situation. Money Advice Direct’s help is readily available and so there is no need to pay a solicitor to sort out the company problems.

Money Advice Direct has seen many businesses fail due to not taking advice early on. The business advice unit therefore understands why businesses fail and as such have built up a wealth of experience which can avoid business failure by trading out.

The key to trading out of business problems is the three-step approach:

1. Work out the scale of the problem;
2. Draw up your budget; and
3. Don't let matters slide - get help if you need it

Key Advice on Trading Out

• Whatever you do, don't let matters slide
• Don't ignore any letters or court papers
• If you get letters from your creditors or a summons to attend a court hearing, don't ignore these
• DO stay in contact with your creditors - they are more likely to be able to help you if they understand your circumstances
• DON'T fail to attend court hearings - the court will have no opportunity to hear your side
• Some advice organisations will help you to prepare for a court hearing and in severe cases may even agree to represent you in court

A structured 'trading out' plan

Please note that a structured “trading out” plan can be implemented to avoid business failure. When considering a 'trading out' plan it is important to identify any financial problems straight away. This may seem obvious but it needs emphasising. If company’s outgoings are constantly in excess of the income and the business hasn’t got enough money in its account to clear its debts, then trading out will not work.

Problems encountered with trading out:-

The typical entrepreneur fails to allow for the running costs of their business.

The directors may not be allowing for the company’s ongoing tax liability and therefore when the tax bill for the year comes in they have not put the money aside and are suddenly hit with a lump sum to find.

Cash flow can be a problem where customers are not paying money for work done on time.

Without careful planning or credit control processes there are no provisions in place to get businesses through periods of difficulty.

With the right advice from Money Advice Direct it can be possible to trade out of difficulties by knowing how to negotiate with the company creditors. It is important to know what powers your creditors have to recover debts and then how to prioritise these.

Factors that are completely out of your control may also lead to the failure of your business and stop it trading out.

Money Advice Direct business rescue teams feels that it is possible to take positive things out of what seems a disastrous situation by trading out.

If your business is experiencing difficulty, you can gain confidential and non-judgemental advice from the 'trading out'“ team on 0800 074 6918 or by completing the FOLLOWING FORM.