Meet the Challenges
in 2012
2012 will be another difficult year for individuals and
businesses. So how can you mitigate yourself and your business
against these risks?
Jeremy Oddie, Head of Corporate Recovery & Insolvency at
Mitchell Charlesworth, explains in these top tips how firms can
meet the challenges of difficult trading conditions in the year
ahead.
2011 was a very trying year for many businesses and individuals.
If the Chancellor's predictions in the Autumn Statement are
correct, 2012 will not be any better with lower economic growth and
borrowing much higher than previously planned.
If further confirmation were required, this fact has been
asserted definitively in recent weeks by more of the world's
financial leaders:
The world is in a "danger zone", according to World Bank
President Robert Zoellick.
The global economic situation is entering a "dangerous place",
so says IMF head Christine Lagarde.
The current 'perfect storm' crisis has arisen as a result of the
Eurozone debt crisis, concerns for the UK economic outlook
(confirmed by the Chancellor's Autumn Statement 2011) and the US
Federal Reserve's grim warning about the state of the US economy.
It is unlikely that these factors will be reduced any time
soon.
Many companies and individuals are likely to face many
difficulties in the year ahead. So how can you mitigate yourself
and your business against these risks?
- Do not "max out" the business overdraft each month; make sure
you have sufficient capital reserves to take advantage of
opportunities.
- Do produce a business plan with forecasts ensuring that actual
performance is monitored against these.
- Do pay accounts on time (not on receipt of writs) and benefit
from discounts. Late payment of bills sends out clear signs to
suppliers who will eventually grow weary and may refuse to supply.
If you are not able to pay, seek an extension.
- Do impose strict credit control and debt collection procedures
- guard against the 'domino effect'. Insolvency practitioners
estimate that 27 per cent of corporate insolvencies are triggered
by another company's failure.
- Do stay up to date with all Crown payments. If you have cash
flow problemsask for a 'Time to Pay' arrangement from the Revenue,
however this must only be viewed as a short-term fix.
- Do not hold a large amount of stock - see if you can arrange
'just in time' supplies with your key suppliers.
- Do ensure your accounting system is fit for purpose and
produces information you need on a timely basis.
- Do not put off seeking professional help - the sooner a
business in difficulty seeks professional advice the greater their
long term chance of survival.
- Do not put personal assets at risk.
- Do review your business for underutilised assets and
unnecessary costs - assets should be made to sweat and surplus
assets should be sold to generate cash. Cost savings will enhance
cash flow.
Download
a printable copy here.
For more information, complete a quick enquiry form, call
Jeremy Oddie on tel: 0161 817 6100, or email: jeremy.oddie@mitchellcharlesworth.co.uk