When a business has insufficient cash to pay its current debts then it is insolvent. This may be a short-term problem, one its suppliers and customers remain unaware of. However, in order to protect your own business, it is important to be alert to all the possible warning signs of impending insolvencies and to take whatever action you can to protect yourselves.
Discounted credit rating report for ECA Members
Dun & Bradstreet offer ECA members, at a discounted cost, a credit rating report. This will help identify, those customers most at risk. It is possible to mitigate some of the risks and costs associated with customer or supplier insolvency; by sharing customer and market research, vetting enquiry documents, employing your commercial acumen and careful management of your own resources.
Considerations for your business
More businesses ‘go bust’ coming out of recession than during recession; the ‘credit crunch’ has left the banks nursing their own balance sheets; as a consequence, funds to bolster under capitalised businesses are hard to come-by. Funds for investment are also in short supply. Developers are being starved of the funds they need in order to ‘kick-start’ their activities. Insolvencies will ensue.
Structuring your activities accordingly, consider the following seven issues to help your business in difficult times:
1. Market Research
4. Pricing & Quotations,
5. Suppliers and Subcontractors
7. As Works Proceed and the Act of Insolvency itself
These issues are explained in further detail below.