One of the main reasons for the rise to prominence of professional accountants in the UK was to wind up failed businesses. This is still part of a professional accountant’s role. Professional accounting firms are often called in to manage the affairs of failed businesses, in particular to pay creditors who are owed money by the business.

InsolvencyWhat is Insolvency

When a company could not pay to its creditors on-time and its purchase invoices become due, so that it is in insolvency status. actually insolvency is start of bankruptcy !.

Factors Leading to Insolvency

  • Inadequate Accounting (More spending and less income will send out cash from balance !)
  • Rising Vendor Costs ( A purchase order with increased price from vendor !)
  • Lawsuits business associates or from customers
  • offerings do not evolve to fit consumers’ changing needs

Solutions to Insolvency

  • Business Debt Restructuring

    • If a business owner plans on restructuring the company’s debt, he assembles a realistic plan showing how he can reduce company overhead and continue carrying out business operations. The owner creates a proposal detailing how the debt may be restructured using the cost reduction or other plans for support. The proposal shows creditors how the business may produce enough cash flow for profitable operations while paying its debts.
  • Negotiating with Creditors

    • Some creditors could accept to hold company checks (due checks) and they will give more time to business owners. so it will restructure debts into more time. The most creditors will accept it and they are typically amenable to this approach because they would like to keep their business.
  • Promote Salesperson with more sales commission

    • If any salesperson get more commission, sure ! they will sell more with positive energy.


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