R2_Amazeballs6 months ago

Hi, First post, so go easy ! I took over my Dads business the start of this year. He asked me to do this on his death bed. I appointed myself director, kept customers happy made sales, revamped website etc etc. Problem was my Dad left no money in the business account so anything I made went back into the business - I never took a salary. The company made a loss and I didn't own the rights to the product I supplied, so I had no equity. I paid an accountant to do all the accounts (they were a mess with incorrect figures dating back to 2015) - he did his own accounts. I paid all debtors off , paid his over due VAT bill from 2015 and went about closing it down. I didn't inherit any money from my Dad just a failing business that I did my best to wind down professionally helping all customers along the way. All the money I have made this year has gone into paying his debts off, various unpaid tax bills from the year prior. His wife recicived all his money so I basically earns 0 for 9 months. I feel a bit angry as she has all his salary without my costs :-( that I have incurred. I'm angry at my Dad mostly which is upsetting. I now have a corperation tax bill from last year to pay. It's a VAT Ltd company, I haven't traded for 3 months as I want to strike it off. How do I pay these debts off, do I claim against his estate which would anger his wife ? Do I take a loan ? (Approx £4000 tax to be paid)  

Fionas_Boy5 months ago

I am involved in business finance. Cash flow products, factoring and invoice discounting being the common ones are very useful tools for many businesses, particularly those who are growing, and are the wrong option for others. There are many providers in the market, offering a wide range of terms taking advice is helpful if you are new to this. The banks for many years have been trying to move away from overdrafts, hence their reluctance to grant them. I agree with an earlier comment moving banks chasing an overdraft is fairly futile. The terms of a cashflow agreement tend to be tailored to the financial performance of the company. However when the advice offered is to dangle a discount to your debtors to encourage early payment it does raise a smile. What size discount is going to induce them to pay? Are we looking at between 5-10%? I recently handled a case where a small consultancy decided to offer 5% discount on all their invoices with mixed results. The factoring solution costs them 3% having negotiated on their behalf not to include a client who is a prompt payer. So they receive monies more quickly, don't pay for those where there is no need, and it doesn't cost them as much. Factoring still seems to carry a stigma as being a desperation move by failing businesses, the last few years has shown that the failing businesses are not accepted by the banks for factoring/CID, so this view of a good management strategy for many is changing.  

Corrie19994 months ago

As we enter what many predict will be the biggest recession in living memory, may I suggest that a seperate forum dedicated to discussion on insolvency and what to do with a failing business might be a good idea? Watching your company slowly going down the pan can be the most desperate of experiences, and the support and practical advice that members of these forums would be able to offer could be invaluable to many. There's no point burying our heads - it's going happen! Just a thought... Bob  

Porker3 months ago
This topic has been discussed elsewhere
- see here