Unfortunately, in today’s economy there are companies experiencing financial issues every day – be it a small family run firm or a much larger international organization – and the reality is that no business area is completely immune to difficulties that can result in bankruptcy proceedings such as pre-pack insolvency. There exists a multitude of different reasons that may cause a business to become insolvent. Some of these reasons may be of its own doing such as poor judgment in decision making, whereas others may be as a result of external influences. Here are 5 reasons as to why bankruptcy can occur.
With the strained economic conditions in the US, an increasingly large number of business owners are overburdened with a huge amount of commercial debt. It is most likely that when you owe debt to your lenders and suppliers, the most common tactic of repaying them is by collecting the payments from your customers for the services that have been offered to them. However, if you’re a business owner, you should be aware of the fact that it is pretty difficult to get your clients and customers pay you; in fact collecting payments from them is gradually becoming a cumbersome and intimidating task.
If you want to start a business online there is a good chance that you will at some point need to take payments via your website. The simplest option of course is Paypal, but as your business grows and you want to make it more professional you will have to consider getting a proper merchant account and getting set up to accept credit card payments.
Nearly every business sets out with the same intention: to make money. But when it comes to the actual financial aspects, unless you are trained in this area, it really can be a monotonous and complicated task.
Staying up to date with your finances is very important, both for tax reasons and to make sure you get paid for the work you have completed in order for the business to run on a daily basis. If finances are not your strong point, then outsourcing to an accountant would be a good idea due to the fact that they have expertise in this area. If they are done incorrectly or submitted late your business can incur quite large fines from Inland Revenue.