Take these steps first if your business faces multiple financial problems

What are the warning signs of liquidation? What should a business owner do if they start to face multiple financial difficulties? And where can they seek help?

We interviewed Legal Affairs Manager Tiina Toivonen from Suomen Yrittäjät, the Finnish SME association.

Take notice when you see these signs

“You need to sit up and take notice if you are worried about your business’s profitability, or are unable to pay wages to yourself or employees, invoices are piling up, you are no longer able to repay loans or interest, there’s been a significant drop in jobs or sales, or you’re worried about how you can cope,” Toivonen says.

Ask for help

“You mustn’t ignore the situation. You should seek advice and help for trouble with your business’s finances as soon as you notice the situation deteriorating. The sooner entrepreneurs start solving their financial difficulties, the more likely they are to bring their businesses back to financial health,” Toivonen says.

Members can contact the Suomen Yrittäjät counselling service. You can also get free financial assistance from the Yritys-Suomi Talousapu advice service.

A business owner should also contact the free Entrepreneur’s Financial Assistance service: Entrepreneur’s Financial Assistance — Centre for Economic Development, Transport and the Environment. The service offers an analysis of the business’s financial situation and advises business owners on their options. It also charts options for bringing the business back to financial health.

Try to agree on a payment plan

“If you are unable to pay your invoices, debts or other payments, contact your creditor and negotiate a new due date. If you just leave your invoices unpaid, they will very soon be sent to a debt collection agency, which will cause your business more costs,” Toivonen says.

To stop your invoices going into debt collection, you should contact your creditors and arrange a payment plan. You should agree the payment plan in writing, for example by email. If you have already received a letter about debt collection, you can try to arrange a payment plan with the agency.

Assess

A weekly cash-flow calculation is also important. It shows how much money is coming into your business and how much is going out.

Ensure that the cash flow in particular stays positive most of the time. For that reason, do cash-flow calculations regularly. A profit and loss statement shows the current financial period’s income, expenditure reduced in accounting, and profit for the monitoring of advance taxes. The balance sheetshows your business’s assets and capital at a given moment.

You can get information about interpreting the figures and drawing up a calculation from your accountant, your local enterprise promotion offices, your region’s Enterprise Agencies and business mentors.

Wind down in a managed way — don’t make decisions in a panic

If the thought of winding down your business creeps into your mind, you should not make rash decisions such as submitting an application for liquidation immediately. The counselling service of Suomen Yrittäjät offers you clear instructions about a controlled wind-down of your business and support for planning the future.