Month: February 2015

Business Recovery Options for the Manufacturing Industry

business-recoveryThe manufacturing industry is a huge part of the business market. There is a lot to manufacture from food to clothes to shoes to phones to computers to appliances to furniture and many more. It is a well know fact however that many of businesses today under such umbrella often simply come and go. They open shop and then later on close. Not everyone gets to stay and live for long. With business comes risk and risk translates to losses and plummeting finances. What is there to do when such things occur? If losses rear its ugly head, what can you do? The answer is to take a look at the business recovery options available and pick one that suits to solve and fix the problem. Listed below are some of these.

  1. Factoring or Receivables Financing is one way to do it especially if insolvency isn’t the case and should the company be suffering from troubled cash flows, low cash and high receivables. There is nothing exactly wrong with having a huge level of trade receivables except if they keep most of your cash locked up for prolonged periods. Factoring or receivables financing allows entities to advance the cash locked up in the receivables and customer invoices even before such have been paid by owing customers allowing it to be used for operations and other necessities deemed fit. Additionally it helps better cash flows, reduces bad debts and improves the cash levels of your financial statements.
  2. The Company Voluntary Arrangement allows the company to continue operations under the agreement that it will repay what it owes to its creditors over a fixed period of time. Such has to be agreed upon by at least seventy five percent of the creditors. The catch however is that the scheduled payments have to be fulfilled otherwise creditors can put you up for a forced winding up procedure. The good thing about this is that it allows the entity to re-organize, reboot and revive its operations on a breathing period.
  3. The Pre-pack Administration is a popular restructuring solution that allows the entire business or part of it to be sold to a third party and operate under a new name. It gives creditors a much better return as opposed to liquidating the company. Additionally, going concern is strengthened. However, it should be noted that not all companies may take on a pre-pack administration. Certain qualifications must be met first and one of them is insolvency. Losses alone would not cut it.

These are only three of the many business recovery options available. It would be best to consult your adviser or a professional practitioner to get more sound advice tailor fit to your needs.