Should you restructure your business when it is not insolvent?
According to an article in the online publication The CFO restructuring should be viewed as a positive.
It suggests: “Companies where the underlying business is sound should look to navigate through the restructuring environment to mitigate against unsustainable debt burdens which have been brought about by the incredibly challenging economic headwinds…”
At the moment the economic situation is changing rapidly, thanks to the war in Ukraine, the energy crisis, rising interest and borrowing rates and increases in the costs of raw materials.
In the last week alone, one piece of research carried out by ACP Altenburg Advisory has revealed that interest rates over the next nine months are expected to cost businesses an extra £13.6bn annually in loan interest payments.
Investors have reportedly pulled a record £27.9bn from UK funds in the last month and according to the Insolvency Service insolvencies have risen by 40% in the last quarter compared with the same time last year.
It is a fortunate business that is not struggling in the face of this dire situation.
But if yours is one of them, it might be worth considering, as the CFO advises, restructuring in order to be in the best possible position to weather the coming storms.
“Early engagement and a proactive approach to restructuring options, even for the healthiest of companies, can result in very positive outcomes for a business. Such efforts do of course also form part of directors’ duties,” It says.
K2 Business Partners has many years of experience in helping companies to restructure and are always at the end of a telephone when you need us.
But your first step is to know exactly what financial position your company is in.
We have a cash management tool that can help you and it is free to download.