5 Efficient Tactics for Protecting Your Company from Bankruptcy

For many business owners, bankruptcy is among the biggest, most distressing fears. This is completely understandable, considering just how much passion and effort is put into a company driven by financial investment. And as the potential side-effects could truly be detrimental to businesses and their leaders alike, reducing the risks of bankruptcy should undoubtedly be among your top priorities.

Protecting your company

Here are some of the most efficient tactics that will allow you to protect your company from going bankrupt:

Review your current expenses

review expenses

Cutting out any unnecessary expenses is an important first step in protecting your company from bankruptcy. This isn’t only necessary for businesses that are struggling to get by, but also for other organisations that might want to reduce common financial risks and minimise their operational costs for maximum profit.

These unnecessary expenses include all costs that don’t add any real value to a company, encompassing even the smaller employee benefits such as free lunches, gym memberships, and streaming service subscriptions. While your teams might not be happy to lose some of these perks, it’s a better alternative than losing their jobs if the company goes into bankruptcy. It might be helpful to explain the situation to them as well.

Always focus on debt payments

Pay debt
Close up of pay debt word on a sticky note .

From unpaid invoices to small business loans, a company can easily get tied up with debts from the very beginning. And while dealing with a certain amount of debt might be a natural aspect of running a business, prioritising your debt payments is truly crucial. Your lenders and creditors can take legal action against you in case you don’t pay, which might force your company into bankruptcy.

Attempt to make at least the minimum debt payments, and ensure you make them on time. In case you’re struggling with capital, you might want to consider restructuring your debt, or creating a repayment plan that will enable you to cover your debts without the risk of bankruptcy.

Consider Trade Finance solutions

Trade Finance

If your company deals in importing and exporting, there are plenty of financial risks you might be facing on a regular basis. To reduce some of the associated risks, many businesses decide on efficient trade finance solutions for streamlining their processes. By providing you with a revolving line of credit, Trade Finance enables you to pay your international and domestic suppliers, improve your cash flow, and close your working capital gap.

This solution can be quite beneficial for both small and large businesses alike. Trade Finance gives you access to any funds that might be tied up in invoices and allows you to make payments to partners with reduced financial and corporate risks, thus empowering you to protect your company from potential bankruptcy.

Think about selling unused assets

Sell unused assets

Most businesses have some assets that they don’t truly need or use. For tech companies, this could mean unnecessarily large computing power, while construction companies might have some extra specialised machinery and equipment. Or, you might even own an empty plot of land or an unused office space that remains untouched.

In any case, selling off assets that have been sitting idly for years without any intended use is always a good idea. The money you make from liquidating your assets will be significantly more useful for sustaining your business or paying off your debts than property and equipment that never gets used.

Rely on experienced management

Experienced management

While working with experienced management might sound obvious, many business owners tend to rely on family and friends when starting a company, or even decide to do everything on their own. Rather than serving as a cost-saving measure, these practices can only do your company a disservice and unintentionally put you at risk of bankruptcy.

Consulting experienced professionals, on the other hand, is truly worth the investment. Whether it’s an accountant, a lawyer, a debt consolidation expert, or a full-time financial advisor, hiring professional management will allow you to avoid some common risks, and give you a better idea of the available options and resources for avoiding bankruptcy and staying afloat.

Although no business owner wants to think about their company going bankrupt, it is always a real possibility. That is why following the advice mentioned above and keeping your organisation financially healthy is key to keeping bankruptcy at bay.

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