Protecting your business from bankruptcy
Today, if you happen to run a business—any type of business—there is the risk of having to file for bankruptcy. This dreaded outcome is often times chosen as a last option, but it still lingers in the air when a company fails to make a profit.
Unfortunately, businesses located worldwide stand the chance of meeting this fate. In the United States, the owner of Columbia House music and movie club filed for bankruptcy this past month, followed by Alpha Natural Resources, Inc. having to filing, too. This company is just one of the latest victims of the coal industry’s downfall.
While over in Canada, the Nine West store owner filed for bankruptcy protection earlier this summer. Regarded as one of the most known shoe retailers in the country, it’s been reported by CBC News that the store owes upwards of $32 million to creditors.
With the assistance of our sister brand Business Review Canada, we’ve put together a list of tips that could prove to be useful in avoiding the act of filing for bankruptcy. Depending on the specific type of company you represent, you may find one option to be more helpful than another. Take a look!
How much can you pay?
Before actually filing, speak with your creditors and learn how much you need to pay—the bare minimum—in order to avoid bankruptcy. If you are honest about your debt burden and at least make an effort to pay it off month-by-month, you may discover that some creditors are willing to work with you.
Are you making a profit?
If you plan on staying in business, then you need to determine how much money your company needs to bring in each month to survive. Don’t forget to include your monthly debts in this figure, as well as all of your operating fees.
Can you change your management team?
Depending on how much your business is suffering, you may need to change your management team. After all, putting someone else in charge with new ideas could be quite beneficial to your business. If you want to turn your company’s success rate around, then you will need to make some big changes.
What costs can you cut?
One of the hardest things about running a business is the need to cut costs. However, if you’re going to save money, then you’ve got to cut back you spending in a few areas. For starters, try to find redundant charges or charges that do not add value to the business. Though difficult, you may even have to let some employees go.
Have you formed a strategy?
If you really want to avoid filing for bankruptcy, then make a plan and stick to it. You need to consider all of your options, and what outcomes will be best for you and your business. Your strategy should list various options of what you can do to cut back and earn a profit.
For example, one option that should be pursued is to ask for longer payment terms from your vendors. If they don’t agree, then it’s no harm, no foul. However, if they agree, then you can extend your accounts payable, which will provide an additional source of cash to help fund short-term needs.
However, make sure you also consider your long-term needs and the overall goal—to stay in business and not be forced to file bankruptcy. Also, don’t be afraid to try and re-negotiate all of your contracts.
Would you hire a specialist?
Though it may not seem like a good idea to spend more money, hiring a professional in the area may be your best options. A financial specialist can look at your business, determine where you’re suffering and then make appropriate changes for you. You may gain a sense of comfort by working with someone who has experience in the matter.
If you have other advice regarding this issue, don’t forget to share with us! Your business tips could help out a fellow owner or executive!
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Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.