When Should I Contact An Insolvency Practitioner?

An insolvency practitioner is a licensed professional who can provide essential guidance on matters of both company and individual insolvency.  

However, many people assume that an insolvency practitioner’s (IP) assistance is only required once a company has become insolvent. The truth is, the sooner a business can identify financial issues and seek advice, the better. 

Therefore, it is important to recognise that an insolvency practitioner should not only be called upon in a financial emergency, but rather as soon as you face financial difficulties.

One of the most common misconceptions is that an insolvency practitioner should be considered only when all other options are exhausted.


What does an insolvency practitioner (IP) do?

An IP will provide advice and guidance to directors and business owners of insolvent or financially distressed companies. Once appointed, they will negotiate with creditors, arrange for the valuation and disposal of assets and assist with outstanding company matters in accordance with the Insolvency Act 1986.

The important thing to note is that this advice can be helpful at various points of a business lifecycle, not just when facing financial trauma. 


It’s important to act fast

An insolvency practitioner can offer valuable advice where companies are still solvent. Subsequently, the faster you act, the better chance your business has of recovery. 

For example, an IP may be able to offer advice around cash flow problems, or guidance if a creditor is threatening legal action against you.  This could resolve financial issues before they become too serious and help avoid liquidation.

Identifying issues sooner and acting upon them can potentially save your business.


Signs of business deterioration

As a business owner or company director it is your role to remain aware of your company’s financial position and be vigilant to any signs of business deterioration. Common red flags include, but are not limited to:

    • Cashflow issues
    • Unclear financial pathway to support company growth
    • Decreasing profits
    • Growing debt
    • Struggling to pay some liabilities 

Identifying issues early and seeking professional advice can mean more potential options to assist in business recovery rather than liquidation. These options might not be available to you further down the line. 

These options may include, but are not limited to: 

    • Restructuring the business
    • The sale of assets to release cash
    • Selling the business as a going concern.

All of these have the potential to secure your business’ future. However, if under your circumstances these aren’t explorable options, having the support of an insolvency practitioner is still essential should the business go into voluntary liquidation.


Why seek professional support?

Whatever the solution is for your circumstance, an insolvency practitioner can offer practical guidance and support. Whether it’s corporate recovery or business insolvency, having professional advice can uncomplicate the process. From negotiating with creditors to understanding the rules and regulations of HMRC. 


Timing is everything

Should a business need to go into liquidation, the right timing is everything. It can have a huge impact on directors, employees and creditors. An insolvency practitioner has the strategic experience to deliver the best possible outcome for everyone. 

They can assist in the winding down of the business and advise on at what stage each step should be taken in order to satisfy creditors and maximise any available funds. 


In summary

Be aware of any signs of deterioration, and if problems arise, act quickly to maximise the options available to the business. The longer you sit on problems, the more restricted your ability to turn the company around becomes. This increases the risk of personal liability. The sooner you enlist the help of an IP, the better chance of potential solutions.  

An insolvency practitioner will give you the best opportunity of keeping the company operating and preventing it from becoming insolvent.

While insolvency doesn’t always mean the end of your company, if you’re experiencing financial difficulties, or you have concerns about the business’ future, you should contact an IP as soon as possible.

The insolvency industry is heavily regulated, therefore if your company is facing insolvency, your best option is to seek professional advice as soon as possible from an insolvency practitioner, whose role is to help protect you and your business when you face financial concerns or difficulties. 

You do not need to wait until these things have spiralled out of control to seek guidance from an IP. If a financial issue is worrying you, get in touch now.


Please call us on 0845 017 0702, email janet.peacock@griffinandking.co.uk or complete our online contact form, and we will be in touch as soon as possible.