Running a business comes with its ups and downs, and the fact is that no matter how hard you try, there may come a time when you need to consider the possibility of liquidation. This can be a stressful time and will lead to you consider several different factors, such as the process, your employees and the future of your business. With this in mind, the last thing you need to worry about is working out how much your liquidation will cost. This article will look in more detail at the process surrounding liquidation and how you can effectively get the best liquidation quote.
What Is Liquidation?
Liquidation is where a business is brought to an end, and its assets are distributed accordingly to directors, shareholders and creditors. This usually happens when a company becomes insolvent and cannot pay what it owes to different creditors. The remaining assets are sold and distributed to pay creditors as much of what they are owed as possible based on the priority of a shareholder’s claim. The term can also mean selling poor-performing goods at a lower price, but this article will focus predominantly on the former.
When Should You Be Considering Liquidation?
There are a few different ways that you can use when considering whether or not it is time to liquidate your company. These include but are not limited to some of the following:
- The Cash Flow Test: You cannot pay your bills as they become due.
- Balance Sheet Test: Your company’s liabilities (which include your contingent liabilities, such as any pending claims you have against you) are more than your assets.
- Legal Action Test: Creditors have started legal action against you through the courts, which would lead to the winding up of your company.
You need to work out whether or not your organisation is solvent or insolvent. You can do this by asking for expert help, as this will avoid any accusations of misconduct later on down the line. If you fail to cease trading when you are insolvent, this could have ramifications.
The Warning Signs
There are a few warning signs that could indicate your company is insolvent; ensure you are aware of these and keep them at the forefront of your mind when trading. These are:
- A significant lack of cash
- Pressure from different creditors and suppliers
- Not being able to collect any of your debts effectively
- Issues in paying your staff wages
- Outstanding tax liabilities
- Levels of bad debt getting increasingly high
- Management information is unreliable and hard to come by
- An inability to significantly secure new lines of credit
- You get a visit from bailiffs
How Can You Get a Quote for Liquidation?
Getting a quote for your liquidation doesn’t need to be complicated; there are so many factors already to consider throughout this process that prospective cost shouldn’t be a worry. If you work with experts, they will be very transparent when it comes to giving you information on how much the whole process will cost. For instance, at Simple Liquidation, we have a liquidation quote questionnaire you can fill out, giving you a quote immediately. This comprises a few simple questions about your business, which we will consider to put together a likely cost for your organisation.
Other Good Properties in Liquidation Experts
As well as your experts being able to give you a simple quote for their services and the process as a whole, there are other properties that you should look out for as well when obtaining help. These include some of the following:
- An Optimistic Mindset: Too many liquidators go into the process intending to sell off a business’s assets and close everything down. This doesn’t have to be the way. Many options are available to a business when closing down, and many of these could result in a more positive outcome. As such, you want to ensure that you are working with innovative experts with a positive mindset that could lead to a better outcome for your business as a whole.
- Good Communication: It’s one thing having good ideas, but they must be effectively communicated to everyone involved so that you, your employees, creditors and shareholders are all on the same page. As such, you need to ensure the experts you work with are proficient in letting you know what is happening throughout the process, what this means and what they think about it.
- Good Recommendations: Good client testimonials and reviews indicate that the experts you are looking at are a good choice for your business. People are very honest regarding the kind of service they have received and, as such, look at different review websites to find out what previous customers’ experiences were like. You can also ask liquidators for testimonials. If they say they don’t have any or refuse to provide them, this should be a red flag.
Do You Need Help with Your Liquidation?
If your business has fallen on hard times and you need some help with liquidation, then you will want to enlist the help of experts such as Simple Liquidation along the way. We can provide you with plenty of information regarding the liquidation process, the position your business is in and then advise on how to move forward. If you have any questions or require further information, please do not hesitate to get in touch.