Our team is among the most qualified and experienced in the UK, having helped hundreds of companies over the last 30 years get on with the vital business of restructuring, refocusing and recovering.

With all that expertise, we asked the team to reflect on the common things they’ve observed over the years, and what they’d like directors today to take on board.

Lessons learned from 30 years in insolvency.

People don’t like to ask for help.

The biggest obstacle to seeking qualified advice from an insolvency professional is that the director(s) don’t like to ask for help. There could be many reasons for this. Some directors believe they can resolve the challenges themselves eventually. Others tell us they feel a sense of embarrassment or shame that the business is failing. Asking for help often makes the situation feel ‘real’.

There shouldn’t be any negative feelings associated with asking for help. All businesses go through tough times, and our team have seen it all. Your business is not the only one in this situation. When directors finally contact us, we often see the weight of their problems fall from their shoulders – they’ve been carrying that worry a long time!

Businesses rarely talk to insolvency practitioners early enough.

Closely linked is not asking for help soon enough. We try to emphasise the importance of seeking advice as soon as problems start to arise, because that’s when the opportunity to resolve them is greatest. Those who ask for help at the right time gain the tools and expertise to navigate financial challenges, which can lead to getting the business back on track.

Many directors believe that speaking with an IP immediately signals the end of the company. That isn’t the case. In the first instance, a simple, honest conversation helps you to understand the potential options that are available.

There’s a perception that the directors of a struggling company don’t care about who they owe money to.

In our experience, the majority of directors feel a huge amount of responsibility for the impact their business will have on others. It’s often why they continue to push on, doing whatever they can to keep the company afloat, before asking for help.

We rarely come across a director who doesn’t care (though we know they do exist!)

All directors should attend an Institute of Directors (IOD) course.

Being appointed as a director comes with real responsibility and also potential liability, which they must take seriously. The IOD has plenty of courses and resources to support newly appointed directors to understand the role they are taking on and how to be the most effective director they can be.

Many directors lack an understanding or awareness of Personal Guarantees (PGs)

By its definition, a personal guarantee makes a director liable to repay the debts of the company if it defaults on repayments or becomes insolvent. Despite this, we speak with directors who signed PGs and still believe they are protected in some way and can’t be held liable.

PGs are useful to help the company access additional finance, but directors need to be 100% clear about what they are putting at risk if things don’t go to plan.

Directors should maintain regular dialogue with lenders.

Having regular meetings with your bank helps them to get to know the directors better. This works in your favour, especially if you want to borrow money further down the line. Banks aren’t that keen on last-minute requests for loans from directors they don’t have much of a relationship with.

Many banks provide ‘statements of borrowing appetite’, and by having regular meetings, a business owner is likely to have a clearer idea of what the bank thinks. Hopefully, there’s no nasty surprises for either side!

Don’t forget the basics of good governance.

When business is good and profitable, it’s easy to overlook the need to regularly check in on cash flows and financial reports, but we wish more directors maintained good governance to help them spot the warning signs of trouble as soon as possible.

Regular checks often highlight issues such as overdrawn directors’ loan accounts, where profits are not on track, and the owners’ drawings haven’t been adjusted. This can become a bigger problem to manage if the business becomes insolvent.

Are you a director in need of advice and support?

If these lessons have prompted you to speak to the team at TruSolv, pick up the phone today. Call 0808 196 8676.