26-09-2007
Struggling SMEs should not head straight for bankruptcy
Individual Voluntary Arrangements (IVAs) may be more appropriate for struggling small to medium-sized enterprises (SMEs) than bankruptcy, it has been claimed.
According to Stephen Rose, director of the Debt Advice Bureau (Dab), it may be better for a struggling SME to opt for an IVA as it provides a greater degree of autonomy after the debt has been cleared.
"Certainly one of the redeeming features of an IVA for many people is that it isn't bankruptcy," said Mr Rose.
"You could consider it a trade-off; you're in it for conceivably longer [but] you retain greater autonomy over your life with an IVA than you would with bankruptcy," he added.
However, for an IVA to be a viable option for an SME, it is important for the business to maintain a steady cash flow, advised Mr Rose.
Cash flow problems are often caused by late payment of invoices. Invoice finance services help many SMEs with such problems to better manage their cash flow and turn their business around.
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