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On Your Marks, Get Set, Go!
What great fun! Thank you to everyone that came and made our go karting day a success. It was great to see you all there putting your best driving skills forward and challenging to become winners. The ...

What great fun! Thank you to everyone that came and made our go karting day a success. It was great to see you all there putting your best driving skills forward and challenging to become winners. The Three Sisters in Wigan was a great track for all to race around, with three racers doing particularly well and our MD Andy Rosler finishing a respectable 8th.

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Is a CVA (Company Voluntary Arrangement) the right choice for you?
Do you understand the implications of a CVA? If your business is struggling you may have considered moving forward with a Company Voluntary Arrangement (CVA), this is often a suitable choice for Di ...

Do you understand the implications of a CVA?

If your business is struggling you may have considered moving forward with a Company Voluntary Arrangement (CVA), this is often a suitable choice for Directors and can help a business get out of a sticky situation but sometimes it may not be the best choice for you.

Therefore it is important that you understand all of the implications that come with a CVA and the likely consequences that may affect your future trading capability.

Disadvantages of a CVA…

  • Creditors/ suppliers may begin to require cash upfront
  • Some suppliers may try to increase their prices, or re-negotiate credit terms voiding previous agreed discounts in an attempt to regain debts owed to them.
  • A creditor owed 25% or more of the debt may be able to dictate terms limiting what may be available to you
  • It effects the company’s credit rating
  • It does not bind secured lenders
  • A CVA will only work if the company is inherently profitable
  • It can take time to achieve. CVAs will run for 3-5 years
  • At least 75% by value of creditors have to agree
  • Companies operating under a CVA may be issued a VAT bond by HMRC. This is where VAT has to be paid up-front, causing cash-flow problems for businesses and often leading to the need for specialist loans.
  • Many Directors who had previously paid themselves by way of a dividend payment can no longer do this; thereby significantly impacting on their personal tax liabilities.

Other options that may be available…

At Ideal Corporate Solutions we offer a number of business finance solutions which could provide an alternative solution to a CVA. Depending on your situation you could apply for one of the following:

Invoice Finance
Asset Finance
Business Loans
Bridging Finance & Credit Lines

If you would like more information on CVA’s or other options that may be available to help your business contact the team at ICS today on 0800 731 2466

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Invaluable information for Accountants and Directors on the CVA experience
Many Directors with a struggling business may, after taking professional advice, choose a CVA which allows the business to pay its debts off over a period of time, whilst turning the business around. ...

Many Directors with a struggling business may, after taking professional advice, choose a CVA which allows the business to pay its debts off over a period of time, whilst turning the business around. Having successfully managed a wide range of CVAs ICS have asked Directors operating a business with a CVA how they found the process.

The results are very insightful and helpful to accountants providing advice, and Directors who are either in a CVA or deciding between a CVA and other options; including a pre-pack, a sale of the business or paying off creditors using external funding.

Click here to download the full PDF.

Managing suppliers:
“I expected it to be hard negotiating with existing suppliers who we owe money to; however it’s also been more difficult than I realised to get the best or even ‘on a par’ terms with new suppliers. This hits our pocket through higher prices and our cash fl ow due to shorter or sometimes even advanced payment terms; its tough.”

Understanding the potential impact on supply and planning how to manage this is crucial to the success of many CVAs. Most Directors expected relationships with supplier’s to be harder but the majority didn’t consider the effect on new supplier relationships. Identifying who your most important suppliers are and thinking about ways you can rebuild the business relationship or prove your new credit worthiness is vital. Advanced payments, shorter terms, exclusive supply agreements and longer lead-times can all help.


Still Struggling:
“Soon after the CVA began, I knew we were struggling again. I didn’t know what to do and I was unsure about talking to the Supervisor of the CVA so eventually I spoke to my Accountant.”

A common problem is when businesses with a CVA don’t make significant changes and soon run into the same problems that got them into the situation in the fi rst place. Successful CVAs need thorough planning from the client and this ideally involves working closely with an Accountant.


Dividend restriction tough for Directors:
“The restriction on company dividend has made a massive diff erence to the Directors. The extra costand tax implications are signifi cant and initially we didn’t realise how much this could reduce our incomes. When you are trying to transform a struggling business, all of your costs are higher so its moredifficult than before and at the end of the day, the return for their income is so much less than it was.”

Most Directors of SMEs will receive a dividend payment which makes up a large proportion of their take home income whilst operating within a CVA, dividends are not payable as creditors must be paid fi rst and in full before any dividends. This increases costs signifi cantly for the business and many Directors end up working in their businesses for a much lower personal income. Calculating new salaries and tax liabilities is recommended so Directors fully understand the options available to them.


Proper consideration:
On reflection I don’t think I fully considered the alternatives presented to me because a CVA felt like the ‘right thing to do’. We eventually came out of the CVA and with hindsight it just cost us a lot of time, money and heartache. Through working with our Accountant and Insolvency Practitioner we managed tofind external fi nance to get out of the CVA. I realise we were fortunate and whilst we still have debts we aren’t trading with the CVA restrictions which were stopping our business from getting anywhere. This finance arrangement has made a huge diff erence to us, the business, our supplier relationships, price competitiveness, management motivation and more.


Conclusion

When considering a CVA and other options, making decisions devoid of emotion and morality is important. Doing something “because it feels right” might not actually result in paying as much back to creditors as other alternative options. Considering all the options is just the starting point; ensuring a real understanding of how each option aff ects individuals and working out the potential impact of key issues, such as Directors pay,
is vital.

Also of significance is the number of businesses that may be struggling in a CVA. In this situation, it is important that the Directors and their Accountants have a good knowledge of the range of options available to companies.

Are you an Accountant with a client struggling in a CVA or a business owner considering your options?

ICS provide a full range of insolvency solutions, we work closely with Accountants and Directors to ensure full consideration of all solutions, including external funding. We have successfully helped businesses at each stage of the process; whether it’s just considering options or those that have already started a CVA.

Click here for more information and full PDF.

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ICS Christmas Drinks 2015!
We would like to thank everyone that came to our Christmas Drinks event last week. It was an enjoyable evening which was well attended. Everyone enjoyed the entertainment, the singer and magician crea ...

Christmas Drinks

We would like to thank everyone that came to our Christmas Drinks event last week. It was an enjoyable evening which was well attended. Everyone enjoyed the entertainment, the singer and magician created a great atmosphere. It was lovely to see so many of our clients and contacts, celebrating a successful year and we look forward to seeing many of you again next year!

Christmas Drinks 2

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Invaluable information for Accountants and Directors on the CVA experience
Many Directors with a struggling business may, after taking professional advice, choose a CVA which allows the business to pay its debts off over a period of time, whilst turning the business around. ...

Many Directors with a struggling business may, after taking professional advice, choose a CVA which allows the business to pay its debts off over a period of time, whilst turning the business around. Having successfully managed a wide range of CVAs ICS have asked Directors operating a business with a CVA how they found the process.

The results are very insightful and helpful to accountants providing advice, and Directors who are either in a CVA or deciding between a CVA and other options; including a pre-pack, a sale of the business or paying off creditors using external funding.

Click here to download the full PDF.

Managing suppliers:
“I expected it to be hard negotiating with existing suppliers who we owe money to; however it’s also been more difficult than I realised to get the best or even ‘on a par’ terms with new suppliers. This hits our pocket through higher prices and our cash fl ow due to shorter or sometimes even advanced payment terms; its tough.”

Understanding the potential impact on supply and planning how to manage this is crucial to the success of many CVAs. Most Directors expected relationships with supplier’s to be harder but the majority didn’t consider the effect on new supplier relationships. Identifying who your most important suppliers are and thinking about ways you can rebuild the business relationship or prove your new credit worthiness is vital. Advanced payments, shorter terms, exclusive supply agreements and longer lead-times can all help.

 

Still Struggling:
“Soon after the CVA began, I knew we were struggling again. I didn’t know what to do and I was unsure about talking to the Supervisor of the CVA so eventually I spoke to my Accountant.”

A common problem is when businesses with a CVA don’t make significant changes and soon run into the same problems that got them into the situation in the fi rst place. Successful CVAs need thorough planning from the client and this ideally involves working closely with an Accountant.

 

Dividend restriction tough for Directors:
“The restriction on company dividend has made a massive diff erence to the Directors. The extra cost and tax implications are signifi cant and initially we didn’t realise how much this could reduce our incomes. When you are trying to transform a struggling business, all of your costs are higher so its more difficult than before and at the end of the day, the return for their income is so much less than it was.”

Most Directors of SMEs will receive a dividend payment which makes up a large proportion of their take home income whilst operating within a CVA, dividends are not payable as creditors must be paid fi rst and in full before any dividends. This increases costs signifi cantly for the business and many Directors end up working in their businesses for a much lower personal income. Calculating new salaries and tax liabilities is recommended so Directors fully understand the options available to them.

 

Proper consideration:
On reflection I don’t think I fully considered the alternatives presented to me because a CVA felt like the ‘right thing to do’. We eventually came out of the CVA and with hindsight it just cost us a lot of time, money and heartache. Through working with our Accountant and Insolvency Practitioner we managed to find external fi nance to get out of the CVA. I realise we were fortunate and whilst we still have debts we aren’t trading with the CVA restrictions which were stopping our business from getting anywhere. This finance arrangement has made a huge diff erence to us, the business, our supplier relationships, price competitiveness, management motivation and more.

 

Conclusion
When considering a CVA and other options, making decisions devoid of emotion and morality is important. Doing something “because it feels right” might not actually result in paying as much back to creditors as other alternative options. Considering all the options is just the starting point; ensuring a real understanding of how each option aff ects individuals and working out the potential impact of key issues, such as Directors pay,
is vital.

Also of significance is the number of businesses that may be struggling in a CVA. In this situation, it is important that the Directors and their Accountants have a good knowledge of the range of options available to companies.

Are you an Accountant with a client struggling in a CVA or a business owner considering your options?

ICS provide a full range of insolvency solutions, we work closely with Accountants and Directors to ensure full consideration of all solutions, including external funding. We have successfully helped businesses at each stage of the process; whether it’s just considering options or those that have already started a CVA.

Click here for more information and full PDF.

Read more
Is a CVA (Company Voluntary Arrangement) the right choice for you?
Do you understand the implications of a CVA? If your business is struggling you may have considered moving forward with a Company Voluntary Arrangement (CVA), this is often a suitable choice for Dire ...

Do you understand the implications of a CVA?

If your business is struggling you may have considered moving forward with a Company Voluntary Arrangement (CVA), this is often a suitable choice for Directors and can help a business get out of a sticky situation but sometimes it may not be the best choice for you.

Therefore it is important that you understand all of the implications that come with a CVA and the likely consequences that may affect your future trading capability.

Disadvantages of a CVA…

  • Creditors/ suppliers may begin to require cash upfront
  • Some suppliers may try to increase their prices, or re-negotiate credit terms voiding previous agreed discounts in an attempt to regain debts owed to them.
  • A creditor owed 25% or more of the debt may be able to dictate terms limiting what may be available to you
  • It effects the company’s credit rating
  • It does not bind secured lenders
  • A CVA will only work if the company is inherently profitable
  • It can take time to achieve. CVAs will run for 3-5 years
  • At least 75% by value of creditors have to agree
  • Companies operating under a CVA may be issued a VAT bond by HMRC. This is where VAT has to be paid up-front, causing cash-flow problems for businesses and often leading to the need for specialist loans.
  • Many Directors who had previously paid themselves by way of a dividend payment can no longer do this; thereby significantly impacting on their personal tax liabilities.

Other options that may be available…

At Ideal Corporate Solutions we offer a number of business finance solutions which could provide an alternative solution to a CVA. Depending on your situation you could apply for one of the following:

Invoice Finance
Asset Finance
Business Loans
Bridging Finance & Credit Lines

If you would like more information on CVA’s or other options that may be available to help your business contact the team at ICS today on 0800 731 2466

Read more
On Your Marks, Get Set, Go!
What great fun! Thank you to everyone that came and made our go karting day a success. It was great to see you all there putting your best driving skills forward and challenging to become winners. The ...

k1

k2

What great fun! Thank you to everyone that came and made our go karting day a success. It was great to see you all there putting your best driving skills forward and challenging to become winners. The Three Sisters in Wigan was a great track for all to race around, with three racers doing particularly well and our MD Andy Rosler finishing a respectable 8th.

T1

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Female First owner bought out of administration
We were recently appointed as administrator for First Active Media, and were able to save jobs by helping the management team buy out the assets. Read about it here http://www.insidermedia.com ...

We were recently appointed as administrator for First Active Media, and were able to save jobs by helping the management team buy out the assets. Read about it here http://www.insidermedia.com

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R3 introduce new website for Creditors
R3 the Association for Insolvency Professionals have recently launched a new website for creditors. The website provides unsecured creditors with a step-by-step guide for the insolvency process. It w ...

R3 the Association for Insolvency Professionals have recently launched a new website for creditors.

The website provides unsecured creditors with a step-by-step guide for the insolvency process. It will be particularly helpful for small businesses that are often unfamiliar with the insolvency process.

Creditor engagement is important to ensure a strong, fair and trusted insolvency regime and R3 has been working closely with creditor representative groups and the government to find ways to improve transparency, understanding and confidence in the insolvency process for unsecured creditors.

So if you are a creditor looking for guidance on insolvency and how it affects you then visit the website at www.creditorinsolvencyguide.co.uk

If you have any questions or would like to discuss further please contact one of our team today on 0800 731 2466

 

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Committee members running struggling clubs are now better protected and have more choice under new regulations.
How does this help clubs with financial worries? Registered Societies now have the benefit of recovery options of the Insolvency Act. This means there are more ways we can help clubs to recover, manag ...

How does this help clubs with financial worries? Registered Societies now have the benefit of recovery options of the Insolvency Act. This means there are more ways we can help clubs to recover, manage creditors and achieve maximum value for their assets and distribute funds back to members. If you are running a club that is struggling financially you have more options than ever before including CVA’s and Administrations; whereas previously only compulsory liquidation was available for an insolvent Society.

A CVA: Company Voluntary Arrangement can offer formal protection for viable clubs concerned about their current liabilities and who are struggling to negotiate revised payment terms. If a club has some surplus income or assets to offer to existing creditors, a CVA may be an appropriate course of action to consider. This is a process whereby a club in financial trouble seeks to reach a binding agreement with creditors in relation to the payment of all or part of its debt within a stipulated period of time. CVA’s must be arranged and supervised by a licensed insolvency practitioner such as ICS. This solution provides the club with the space it needs to manage its own affairs without having to deal with the immediate threat posed by creditors. Click here for more information and benefits of an approved CVA.

Administration is a formal insolvency procedure which can be used as a tool to rescue a club that is having financial problems. An administration may restore the club’s viability and save it as a going concern, protect the club from its creditors whilst it tries to come to an arrangement, or may help realise the club’s assets for the benefit of any secured and preferential creditors. To find out more about Administration please click here

The most important thing to do is to seek advice from a licensed Insolvency Practitioner as early as possible to give your club the time to seek advice and support for the best solution to meet their requirements.

The legal bit explained? From  1  August 2014 following regulatory changes Industrial and Provident Societies ceased to exist they are now all known as Registered Societies and they must be either a Co-op Society or Community Benefit Society.’

The legislation related to Friendly Societies differs from Registered Societies, if you are managing a Friendly Society which is struggling financially please contact the ICS team for Specialist Advice on the different range of options available to you.

Why is it important to make Committee Members aware of their ‘Directors’ duties? Committee Members of Registered Societies are considered Directors and are therefore, under the new legislation, subject to the Companies Director Disqualification Act and as such should take their responsibilities as seriously as though they were Directors of Companies registered at Companies House.

ARE YOU A MEMBER OF A LONG-STANDING CLUB / SOCIETY STRUGGLING FINANCIALLY? We can help you. Contact ICS today to talk to a specialist Advisor who can help you understand the options you have to manage your financial situation, supporting you to get the best solution for your Society and its Members.

FIND OUT MORE ABOUT HOW ICS HELPED KESWICK LABOUR CLUB

CLUBS STRUGGLING FINANCIALLY CAN GET HELP AND GUIDANCE FROM ICS

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