Many small business owners struggle to understand the routes that are open to them in a time of financial difficulty. There is a lot of information on the internet, but it is often difficult to understand and may be conflicting. What you really need is someone who can take the time to talk through your options with you, explain them clearly and help you choose the best route.

The choice of insolvency practitioner you select is a key decision. You will need to work closely with them for a long period of time, and it is important that you feel comfortable with them. You can find out more about an IP by searching the Insolvency Service Directory and looking at their known details, including their qualifications and awarding body number. It is also worth checking that they are licensed to work in your jurisdiction.

Whether you are considering an Individual Voluntary Agreement (IVA), Company Voluntary Arrangement (CVA) or administration, the insolvency practitioner you appoint will have different roles depending on your circumstances and which procedure you decide to proceed with. The IP will first act as an advisor, and then help you to finalise the terms of your IVA or CVA. Once your IVA is underway, the IP will become your Nominee and have a range of legal duties to fulfil.

When you are deciding which insolvency practitioner to use, look for one with extensive experience and expertise. You should also check that they have a good reputation, especially with local solicitors and valuers. They should have a wide network of connections that can speed up the process and make it easier for you and your creditors.

Cash flow insolvency affects both businesses and individuals, and usually occurs when you run out of assets to sell or places to borrow money. This can lead to a situation where your debts exceed your income, and you will have no other option but to negotiate a debt repayment plan with creditors. This is often referred to as an informal debt settlement.

To prevent or alleviate cash flow insolvency, you should implement a system of daily and weekly short-term cash projections that show exactly when you are likely to run out of cash. This will help you to adjust your payment policies in time and avoid liquidation or insolvency.

It is important to seek insolvency advice at the first sign of financial difficulty. The earlier you seek it, the more avenues will remain open to you. Moreover, the sooner you seek it, the more likely it is that your company will recover from insolvency and continue to trade.

Insolvency advice is a complex subject, but it is vital for the protection of your personal wealth and the viability of your business. The Insolvency Service has an excellent website that can guide you through the process. They also have a database of licensed insolvency practitioners. The website allows you to search by an IP’s name, firm and authorisation number.