By most measures, the economy is doing fine. There is a remarkably low rate of unemployment. The stock exchange is booming. Gross domestic product is on the rise. For most people, bankruptcy is not a pressing concern now.
Corporation bankruptcies rise and fall like waves, mirroring the ups and downs of the economy.
Avoiding Bankruptcy by William Schantz
Even though bankruptcy trends can be seen as an indication of the economy, if you are the CEO of a failing company, you know the pain on a much more personal level and must act swiftly to stop the company’s cash flow.
In this article, William Schantz addresses how to make your business stay out of bankruptcy.
Restructure Your Business
According to William Schantz, business restructuring is a viable alternative to filing for bankruptcy and getting out of financial trouble. In such a case, a company has more leeway in devising a strategy to avoid going out of business entirely or declaring bankruptcy.
Your company’s accountants can be a valuable resource for creating a workable budget, negotiating with debtors, and establishing a payment plan for overdue bills.
Debt Payoffs
When businesses try to take on more than they can successfully manage, complications arise. If you don’t need any loans, you won’t have to worry as much about taking on too much debt.
Paying off debt should be second only to survival when making financial plans. Loans secured by tangible assets, such as machinery, should be repaid ahead of unsecured debt. It’s best to stay away from unsecured loans like credit cards. If you need a loan or financing, get all the details in writing, and negotiate favorable terms.
Expenses Bookkeeping
Keeping a monthly record of your income and expenses (an “income and expense sheet”) can help you gain insight into your spending patterns. Avoid the emotional and financial burden of filing for bankruptcy by using a budget tracking spreadsheet to guide your spending decisions and keep you on track.
Be Conservative
If you’re in the middle of a financial emergency or are running a business, you need to take a hard look at your spending habits. Cut out the fat by doing away with unnecessary expenditures, reviewing potential layoffs or reduced hours, and liquidating any extra assets.
William Schantz has said Extra money should only be spent on essential things. Spending on frivolous business activities like catered lunches, expensive meetings, and magazine subscriptions must end.
Set Terms and Conditions
According to William Schantz, the ability to identify late-paying customers and take preventative action in the face of preferential transfer liability can be greatly aided by establishing and implementing uniform terms and conditions.
It will also help you keep track of any growing receivables that could be written off in bankruptcy, allowing you to stop their growth if necessary.
William Schantz’s Concluded Thoughts
Bankruptcy is a last resort that most business owners would rather avoid at all costs. Although it will be a struggle, using the methods outlined here will help you begin to rescue your company from financial ruin.
William Schantz further advises getting to know seasoned professionals, such as lawyers, accountants, and a banker, who can assist you in making crucial decisions and putting together effective plans. If you follow these steps, you will have a much better chance of avoiding bankruptcy and building a solid foundation for future success.