The danger of administration in 2020

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Written by Michael Foote, founder of Quote Goat, has over 13 years experience working in the finance, insurance and currency sectors.

You just need to look at the businesses that went into administration in 2019 to understand that the number of businesses at risk is on the rise.

Even household names like Mothercare, Thomas Cook and Jessops have all began administration proceedings. Mothercare, the mother and baby retailer finally went into administration in November of last year after the closure of a number of stores throughout the previous two years were unable to recoup enough funds to sustain its remaining stores.

Thomas Cook began liquidation proceedings after the travel agent and airline’s 560 high-street stores were sold off cheaply to Hays Travel/Just Go because struggles put off any prospective administrator from taking the reins.

Understanding the process that causes even large corporations to fall into administration can help SMEs protect themselves from similar shortcomings. It may exist on a much different scale but the main cause for liquidation is a lack of cashflow.

Without regular cashflow, the day-to-day running of any business becomes incredibly difficult. Daily overheads cannot be met, utility bills cannot be paid, wages cannot be honoured and the chance to expand the business is reduced without the lack of funds to grow.

Invoice financing could be the key

When a company is having difficulties with cashflow, things can come to a standstill very quickly. It is absolutely vital that a business doesn’t let things become stagnant – change is good and shouldn’t be shied away from.

A big change a lot of businesses are making is utilising invoice financing to free up cashflow from unpaid invoices.

Unpaid invoices are a problem all businesses have, but it is something that shouldn’t be ignored. It is also a problem that can develop into a company going into administration if they’re not careful.

If you have unpaid invoices and are struggling for cashflow that is holding you back from expanding or even just getting by day-to-day, compare invoice finance with Quote Goat, now.

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