Bankruptcy is a nature in which a business is unable to meet its financial obligations.at this state, if all assets get evaluated, they can’t repay all the outstanding debts. Bankruptcy filing is a process in which a business undergoes to meet all its financial demands. If this happens, the company can free itself from all outstanding debts. When all debts get settled, the balance gets forgiven to the owners of the business. Helen Lee Schifter believes that businesses should try all their best to avoid bankruptcy filing since it results in the end of it. The following are ways to avoid filing for bankruptcy.
1) Reduce Expenses of Less Important Budget
The business needs to assess its budget to uproot all the expenses that it’s not a must to be there. For instance, it is advisable to reduce employee lunch, buy unused software, airtime on phones, etc. By consolidating all these expenses, you can save a good amount that gets serviced to pay debts.
2) Always Budget for the Future
Business always needs to see tomorrow. In this case, they need to have in mind the probability of maintaining the same customer tomorrow is uncertain. The same issue with a client paying for the job done can be impossible. At this point, a reservoir for business is good for sustainability even if there is no business or payments.
3) Give Priority to Debts
Always when the business has cash flow, it lets it be a habit of prioritizing debts. In such a scenario, the company gets required to have a plan of its obligations. They get lined up depending on their urgency and interest rates incurred.
4) Selling All Idling Business Assets
All business assets that are unused need to get disposed of by selling them. By doing this, you can clear some debts preventing the business from filing bankruptcy.
5) Review the Current Business Plan
Here the business plan needs to be reviewed so it can meet the current state of business. This calls for companies to get reenergized by changing all the strategies that can boost the business. Marketing strategies need to be revisited to boost sales.
6) Reduce the Signatures Required for Approval of Any Expense
All approvals for all expenses, no matter how small they are, need to be done by the owner. In this, the business can control costs and forfeit the less important ones.
7) Increase the Productivity of the Business
The business needs to look for ways to increase productivity. They need to reduce the workforce so that they are left with a small manageable team. And also needs to maximize well with the bit of time they have, even if it calls for overtime hours.
8) Negotiation With Lenders and Creditors
The business requires having a negotiation with lenders and persuading the creditors. Negotiating with creditors makes them understand the hardships the company is facing. Business review the repayment terms that will not make it. It is persuading the creditors to make early payments to save the business. Introducing discounts on future jobs by making early payments by creditors can also protect the company. Helen Lee Schifter believes that filing for bankruptcy is a nightmare since this leads to difficulties in accessing any loans.