Debt doesn’t necessarily mean bankruptcy! Here are some rethinking
“Debt payment is a sacred obligation.” But where did the debt come from? Do you have an idea? Let go of the inherent notion that being chased for debt and being unable to repay means applying for bankruptcy. Stop and think, calm down and review the company’s financial records and personal assets. There may be a turning point!
- Identify the source of responsibility: Where has the money gone?
In general, debtors are only aware of their debts when they are pursued, and then they see that their balance in bank accounts are limited and they have no way to raise funds, so they naturally apply for bankruptcy. However, they have overlooked one step: for every purchase and sale in business, where did the money go?
Many bosses are good at managing their companies but don’t know where to start with accounting. When they turn to an accountant for help, they discover that there are many uncollected debts, which means they do not have the funds to repay their own supplier and become a debtor. Unless it is pathological consumption or long-term mismanagement, large sums of money will not disappear for no reason. If there are quality issues or returns that affect cash flow, consider selling to other suitable sellers or communicating with suppliers. Minimize the waste and chase the customers to settle the outstanding bills, may led to run out of bankruptcy.
- Selling assets
If excess spending is due to poor company management or over-expansion, boss can consider selling personal assets for cash. Luxury watches, branded handbags, cars, and properties all have markets and values. Even if they can only repay a portion, it is still safer than borrowing more money. New debts replace old debts, and the debt snowball will only get bigger.
- Debt restructuring
For individual cases, such as many restaurants being unable to operate normally during the epidemic but having to cope with monthly rent burdens, you can appoint an accountant as an agent to apply for debt restructuring (IVA). The accountant will integrate the debtor’s asset status and negotiate with the landlord for a new repayment plan, such as extending the repayment period or reducing interest rates, etc. Of course, debt restructuring requires the acceptance of creditors and approval from the court to be feasible.
There are always more solutions than difficulties. Avoid getting stuck in existing problems. Consult a professional accountant for advice, analyze current funds and debt situations in detail, and bankruptcy is not necessarily the only way out.
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