When you’re in business, the long-term goals are at the forefront of your mind. One of these goals rarely differs from person to person: make as much money as you can. Whilst this is a good start to have, there’s always the idea of debt lurking on the horizon. So on the other hand, we should also have a debt management plan in place if we’re either regular workers, or if we’re starting our own business. Below are a few tips on how to prepare for and cope with insolvency.
What To Do As An Entrepreneur
Having to face bankruptcy as a business owner is extremely hard. Often it can represent a massive decline in your goals, and can make you want to immediately give up. However, there are ways to face business insolvency, with the minimum including help blogs and debt centres designed specifically to be a guiding light.
If your company has more liabilities than assets then you risk becoming insolvent. Make sure you know how to read your balance sheet correctly. Always know what current assets you have that can be immediately turned into cash if it would help. This can mean putting on a sale if you have a boutique to help lessen the effects of insolvency.
It’s a good idea to reach out for professional advice. As mentioned, you never have to face debts alone, so don’t let yourself.
What To Do As An Employee
Employees are at just as much risk when a company becomes insolvent as a employer. It doesn’t have to mean the loss of your income straight away, but can affect family life. If your employer no longer has the means to pay you, remember that you have rights. You still have the right to be paid if your employer is trying to sell a business, meaning you can collect any pay once this is done if you’ve been kept on in the meantime.
Similarly, you can also experience a temporary layoff. This is a short term solution to handling a company’s insolvency as you won’t be scheduled for shifts in that time, but you’ll still be on the payroll. However, if you’re out of work for longer than a month, you then have the ability to claim redundancy pay.
Don’t let yourself feel singled out if you don’t receive the full amount of pay you are owed; this is quite a common occurrence. You’re likely to receive at least a month’s worth of pay, but you cannot claim anything over £500 in a single wage. This is an unlikely pay rate anyway, so gaining what’s owed to you is a fairer game than you might have first thought.
Debts don’t have to be the be-all end-all of your business or income. Just make sure you know how to handle them if you find yourself in the situation, and don’t lose sight of the future. We all want to protect what we’ve made, and plenty of options are available for this.
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