Sollertia Blog

It’s not a pleasant process when you or your company become bankrupt, but it’s by no means the end of the road for you as a businessperson. You could become an employee for a number of years until your bankruptcy order is terminated and then start up another company.

Starting a new business

There is nothing stopping a bankrupt person starting up a new business after bankruptcy. You may be disqualified from being a company director for a number of years, but you can still start a business as a sole trader or partnership.

Financing the business

It may be difficult to obtain credit or loans if you are personally bankrupt or the director of a bankrupt company. This can make it difficult to obtain the necessary capital for a new business.

If you are in partnership with someone with a good credit record, you may find credit easier to obtain.

There are alternative ways of starting a business. If your business idea and plan are sound, you may be able to find investors interested in funding the business.

You could start a consultancy business or service-based one that requires little finance to get started. You may be able to work as a self-employed subcontractor for a large business and not need much operating capital.

The Bankruptcy Order will remain on your credit file for six years or more, after which you can slowly build up your credit rating.

Be careful with your finances

Many businesses go bankrupt due to poor financial decisions. If you start another business, avoid this by using a financing outsourcing service who can look after the recording and administration of the finances for you. Use an accounting service that can advise you on how to maintain a healthy cash flow.

Extending payment terms

One strategy for a healthy cash flow is to make extra sure you get paid on time. If possible, limit the number of credit customers, and remember that a good outsourced financial service can take over the collection of payments for you.

There is a life after bankruptcy

Although bankruptcy is not a good experience, your career or business life can recover. Many successful entrepreneurs have had business failures from which they have bounced back from. Among the people who have headed bankrupt companies are Walt Disney – who went on to become a multimillionaire with his own empire – and current US President Donald Trump.

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Small businesses need a healthy cash flow, but this can be difficult if the business is owed money that’s hard to recover. These five tips are designed to make it easier to recover debts.

1. Minimise headaches

Why not outsource your credit control to Sollertia? We can chase up late payments for you, freeing up your time and easing your stress levels?

As a firm, we have years of experience and can handle all of your business finances, including debt recovery.

2. Use preventative measures

Prevention minimises overdue payments. If you allow customers to pay after services or goods have been delivered, make sure every new customer is credit checked. Set strict credit limits for new customers and make sure that they agree to sign your terms and conditions.

Some businesses incentivise paying on time by offering discounts.

3. Create a set procedure

Your business needs set procedures to recover money. This starts with sending out an invoice as soon as a service or goods have been delivered. A few days before payment is due, send a statement that acts as a reminder that payment is needed.

If payment is not received by the due date, send out a reminder letter. If this fails, then a telephone call can be made to the person in charge of paying invoices. Find out if they have any queries about paying, or if they are struggling to pay. If they are short of funds, an instalment plan may be appropriate.

Communication should be polite and firm. Harassing a customer or being angry is likely to be counterproductive.

4. Use a debt collection agency

You can hire a debt collection agency to do the debt recovery precedence for you. Professional debt recovery agencies will chase late payments in a professional manner.

5. Legal action

This is a last resort, and starts with a formal letter advising your clients that you intend to take legal action. If payment is still not been made, there are a number of legal options available including the small claims court. For large debts, you can ask a court to declare an individual debtor bankrupt or they can wind up a company. Provided the debtor has enough funds to pay the bill, the threat of this court action should be enough for them to pay up.

Most businesses will have overdue unpaid invoices, but a good outsourced accounting service will advise you on how to deal with late payments.