Prevent, detect and act: Strategies to assess and address the risks of corporate insolvency
Posted: Sun Dec 15, 2024 6:34 am
To prevent business insolvency, it is essential to follow strategies such as developing a solid cash flow budget or controlling customer credit.
Early detection will be essential as it will serve to address insolvency proactively.
Rising interest rates, rising prices and sudden changes in market demand can push companies into bankruptcy .
Corporate insolvency can lead your company to bankruptcy.
Bankruptcy proceedings are a legal procedure that allows a company to restructure its debt and continue its activity.
To minimise the effects of corporate insolvency , the Council of Economists and CEPYME have prepared the 4th edition of the “Guide to business action in the event of insolvency”. This guide includes recommendations and solutions for dealing with these cases.
Start of marked textTWEET IT! Remember that prevention is the key to keeping business insolvency at bay.End of marked text
Key points of the new Bankruptcy Law
In order to deal more efficiently with insolvency processes, a new Bankruptcy Law was approved last year . This Law redefines management mechanisms and promotes the early detection of financial problems. Law 16/2022, of September 5, on the reform of the consolidated text of the Bankruptcy Law, promotes restructuring plans. Although, for the moment, not too many plans have been approved, they are having success in saving companies in crisis.
The insolvency systems established in the new Bankruptcy Law have the following purposes:
Seeking an efficient reallocation of productive local marketing email list resources in companies in crisis . This is the case of economically viable activities, but with financial difficulties. These procedures seek to facilitate restructuring of liabilities that guarantee both the rights of creditors and the continuity of the company.
Another key point of the new Bankruptcy Law is the one related to the discharge of debts . When the insolvent debtor is a natural person, the purpose of the bankruptcy is to identify debtors in good faith and offer them a partial discharge of their outstanding liabilities. In this way, it is sought that they can benefit from a second chance. In this way, they will avoid being forced to work in the underground economy or having to live and work in marginal situations.
Sage X3 and Sage 200 help you keep your company's finances under control to minimise the risk of business insolvency.
Strategies to keep the risks of corporate insolvency under control
To manage these risks, control bad debts and ensure that your company can maintain a solid financial position, you can follow these strategies:
Develop a solid and rigorous cash flow budget . This budget must meet the following requirements:
Be realistic and detailed.
Include short- and medium-term income and expense projections.
Track your compliance.
If you anticipate your financing needs with your cash flow budget , you can take preventive measures to avoid liquidity problems. With Sage 200 you can easily prepare your cash flow budget.
Early detection will be essential as it will serve to address insolvency proactively.
Rising interest rates, rising prices and sudden changes in market demand can push companies into bankruptcy .
Corporate insolvency can lead your company to bankruptcy.
Bankruptcy proceedings are a legal procedure that allows a company to restructure its debt and continue its activity.
To minimise the effects of corporate insolvency , the Council of Economists and CEPYME have prepared the 4th edition of the “Guide to business action in the event of insolvency”. This guide includes recommendations and solutions for dealing with these cases.
Start of marked textTWEET IT! Remember that prevention is the key to keeping business insolvency at bay.End of marked text
Key points of the new Bankruptcy Law
In order to deal more efficiently with insolvency processes, a new Bankruptcy Law was approved last year . This Law redefines management mechanisms and promotes the early detection of financial problems. Law 16/2022, of September 5, on the reform of the consolidated text of the Bankruptcy Law, promotes restructuring plans. Although, for the moment, not too many plans have been approved, they are having success in saving companies in crisis.
The insolvency systems established in the new Bankruptcy Law have the following purposes:
Seeking an efficient reallocation of productive local marketing email list resources in companies in crisis . This is the case of economically viable activities, but with financial difficulties. These procedures seek to facilitate restructuring of liabilities that guarantee both the rights of creditors and the continuity of the company.
Another key point of the new Bankruptcy Law is the one related to the discharge of debts . When the insolvent debtor is a natural person, the purpose of the bankruptcy is to identify debtors in good faith and offer them a partial discharge of their outstanding liabilities. In this way, it is sought that they can benefit from a second chance. In this way, they will avoid being forced to work in the underground economy or having to live and work in marginal situations.
Sage X3 and Sage 200 help you keep your company's finances under control to minimise the risk of business insolvency.
Strategies to keep the risks of corporate insolvency under control
To manage these risks, control bad debts and ensure that your company can maintain a solid financial position, you can follow these strategies:
Develop a solid and rigorous cash flow budget . This budget must meet the following requirements:
Be realistic and detailed.
Include short- and medium-term income and expense projections.
Track your compliance.
If you anticipate your financing needs with your cash flow budget , you can take preventive measures to avoid liquidity problems. With Sage 200 you can easily prepare your cash flow budget.