Business owner: seek help in a cash-flow crisis

There has been a concerning increase in the numbers of bankruptcies and debt restructuring. The Yrittäjän talousapu financial counselling service reminds business owners that help is available.

The number of bankruptcies between January and June rose by 21.3% from the same period last year. In July, 224 companies sought bankruptcy, compared to 148 in July last year. More debt restructuring processes have been begun this year than last year, also. Juhana Brotherus, Chief Economist at Suomen Yrittäjät, the Finnish SME association, recently commented on the grim bankruptcy figures.

The Yrittäjän talousapu counselling service reminds business owners that a bankruptcy or debt restructuring do not suit all businesses. A sole trader can seek debt restructuring for both their business and personal debts. So far, the level of sole traders seeking debt restructuring has been low, but the number of applications is expected to grow in the near future.

Debt restructuring for business owners

• An independent business owner or sole trader can seek debt restructuring for both their business and personal debts.
• The basic requirement for accessing the restructuring is profitable business operations.
• The business owner must take measures to improve profitability before seeking debt restructuring.
• The owner of a company cannot seek private person’s debt restructuring for their business’s debts.
• The shareholders of a company can seek debt restructuring for their personal debts if the business operations are profitable and the business can pay the costs arising from business operations.
• The debts outstanding after business activities have been wound down can be restructured as part of a private person’s debt restructuring.
• When restructuring the debts of former business activities, the additional requirements concerning a company owner do not apply. Instead, the requirements of the debt restructuring are evaluated on the basis of the requirements for private persons.

How the counselling service helps

The Yrittäjän talousapu counselling service has seen the challenging financial situation facing business owners in its own work. The service has been contacted more times than in the equivalent period last year. By the end of July, the service had been contacted around 2,200 times, with some of the contacts concerning winding down a business or bankruptcy.

“A business owner can also fix a difficult financial situation with lighter steps than company reorganization or debt restructuring. The important thing is to act in time. A business can agree on payment programmes, savings, or improve its marketing, for example. In our counselling service, an expert reviews the business owner’s situation and the business owner gets suitable guidance for their situation. The earlier you get in touch, the more opportunities you have to fix the situation and save your company,” says Jari Leskinen, Development Manager at the TE Customer Service Centre responsible for the Yrittäjä talousapu counselling service.

The previous government made efforts to improve business owners’ situation through several changes to the legislation on company reorganization and debt restructuring. The current government programme aims to increase teaching of financial skills and entrepreneurial education at all levels of education. The Yrittäjän talousapu service advocates on behalf of better financial skills among business owners as part of the EU-wide Early Warning Europe network.

The Yrittäjän talousapu counselling service serves business owners in Finnish, Swedish and English.

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