You may have noticed the National Competitiveness Council’s Annual Report was released earlier this week. In it, the Council said that the cost base has not fallen nearly enough in Ireland to return the country to a position of competitiveness. It offered suggestions and recommendations to help the Government boost competitiveness – however, most of the suggestions revolve around cutting costs and public sector reform, which we’ve all heard before. In fairness to the Council, in their report, they did highlight issues such as the non-implementation of the Local Authority Efficiency Review Group’s report, which could save €500m every year. However, as costs continue to remain high, the truth is that Ireland cannot maintain or indeed create any position of advantage in the international market.
Translate this on a smaller scale to your business and you’ll get a real understanding of the situation. Last year, according to The Insolvency Journal, 1,638 businesses found themselves to be insolvent – up over 100 from the year before. As more and more companies here feel the pinch, whether it’s through declining sales and, by association, decreased revenue, it’s becoming clear that more companies are getting into trouble and going to the wall when perhaps, in a lot of cases, there is no need to.
To know whether or not your company is insolvent or likely to head that way, ask yourself the following questions: Am I getting more calls from irate creditors than I used to? Has my sales stream declined since the last quarter? Are we making as much money as we used to? How has the decline in the economy affected my business and can we stay afloat if it falls further? If you don’t like the answers that you’re giving yourself, your company is most likely headed for trouble.
In such a situation, it’s very easy to panic – after all, most business owners worry about paying salaries at the end of every month and bury their heads with that particular problem without dealing with the wider issues. By ignoring calls from creditors, for example, you could be putting your supply chain at risk which will, in turn, hinder any chance that you have of recovery. If you have no suppliers or can’t get credit because you’ve developed a reputation rating within the industry, you can’t operate your business. Instead, talk to your creditors, and explain the situation to them – in most cases, we have found, they’ll be happy to work with you as long as they know what’s going on.
Probably the most important piece of advice we can give you is that it’s senseless trying to deal with an insolvency issue yourself or with business partners who don’t have the necessary expertise to help you get out of trouble. Get professional advice as soon as you can – you may think that it’ll cost you more when the debts are already piling up but a good insolvency expert should be able to tell you within half a day where your business stands as long as they have all of the relevant information available to them. What’s more, they can help you put a plan in place to get your business in a solvent position again or prevent a disaster before it happens.
DCA Accountants and Business Advisors