6 ways to keep your business safe from bankruptcy

Bankruptcy: the word that sends shivers of fear in every businessman’s bones. The word signifies that one’s business is in deep financial trouble and revival is next to impossible. U.S. courts revealed that in March 2019, annual bankruptcy filings totaled to 772,646!

If you don’t want to be a part of this pack, keep a regular check on your company’s financial performance and a close eye on your expenditures. Apart from this, below I have also enlisted 6 ways that will help you steer your business far away from bankruptcy:

1. Ensure that all your bills are paid on time

Not paying your bills on time would eventually add up the amount you owe to various organizations. On a later date, if you are unable to pay the bills, you will have to borrow more money in order to pay those bills and avoid legal action. However, in the worst case, if you fail to make payments on time, your relationships with the lenders will take a hit – and we all know in the business world, reputation is everything.

If organizations you owe money to take you to court for not repaying the money, your credit report will be negatively impacted and you will inch towards bankruptcy (which you definitely don’t want)

2. Review your expenses

Spending recklessly is one of the main reasons why several businesses go bankrupt. You must review your financial reports regularly to check for any expense that can be avoided. Any expense that is not required for the operations of your business, is an unnecessary expense and is a wastage of your resources. Cut these extra expenses and use the saved amount to pay your debts and bills.

3. Pay your taxes regularly

Non-payment or delay in payment of taxes must be avoided at all costs. If a tax lien creeps onto your credit report, it will become very difficult for you to conduct business. When your clients take a look at your credit reports, they would not feel confident about doing business with you as they might fear that you might not pay them on time as well.

4. Use credit reports to take stock of your finances.

You can tell if a business is financially healthy just by having a look at their credit reports. Not only that, these reports can help you review your company’s finances regularly and make any necessary changes to keep your business on track.

Credit reports also come handy when dealing with a customer for the first time. Make it your policy to go through the credit reports of every new client you acquire. Analyzing their credit scores could give you a fair idea of their company’s track record. In case you find anything suspicious, you can back out of the deal before it’s too late, because conducting business with susceptible defaulters can also lead you to bankruptcy.

5. Always maintain an emergency fund

It would be a grave mistake on your part to simply assume that a particular client of yours would not face financial troubles down the road. In the corporate world, even the businesses with the best of track records face a massive hit due to financial limitations. It is important that you analyze all your clients’ credit reports regularly and warn them if you see something going wrong. If they seem inconsiderate towards your advice, it’s in your best interest to stop future transactions with them.

Despite this, there might be a possibility that the business faces financial trouble. To see through such a storm, you must be prepared with a handy sum of money. Invest some portions of your profits into an emergency fund that you save only for such situations.

The bankruptcy process is long and tiresome and not something any business wants to endure. While there is no absolute cure for avoiding the effects of bankruptcy, sound financial practices are just as important in good times as they are in bad, and proactive debt management has always been a critical part of that equation says experts at cedar financial.

6. Get help from competent people

You cannot sit back once you hire someone to assist you in managing your business. You need to keep track of their performance. If you notice a dearth of efficiency, do not hesitate to eliminate them. Hiring incompetent people to assist you will only lead to your business’ downfall. On the contrary, the right people for the job will ensure that your business operations witness positive growth and you avoid the risk of bankruptcy or any other financial problem.

When it comes to your finances, you will need to be even more careful. You need to get help from qualified individuals who are worthy of your faith and trust. In the daily activities, if your accounts given you even the slightest hint about bankruptcy, contact the professionals immediately. Trust me it’s better to pay a part of your income to these professional debt collectors that to let it drown entirely.

Once your business drowns in the mud of bankruptcy, nothing will be able to steer it to the shore. So, follow these 6 cited ways to the T, and let your business enjoy a financially healthy run.