It is possible that they may open up alternative lines of supply to run alongside those made by the company, which would result in a reduction in turnover or even worse, they may completely resource elsewhere, with potentially devastating effects. Company’s that have previously enjoyed the benefit of “stretching” credit lines particularly those from involuntary creditors, such as the Crown, will find that they will be faced with a zero-tolerance situation in the future.
A CVA is also a matter of public record, being registered at Companies House. A company in CVA will therefore invariably find its credit rating is affected. However, much damage has often already been done to this rating by the time a CVA is considered. This may sound pretty pessimistic, but in reality many companies successfully complete CVAs. However, all of the above has to be considered and where possible, resolved before a CVA is proposed. The key is to begin to plan long before the position becomes critical.
By far the most important consideration in preparing for a CVA is what needs to change? There could be changes needed in management personnel or style or possibly the business model needs to be revised. Maybe a more aggressive credit control system is required. For a CVA to work, something must change because if nothing changes, everything will remain the same and if everything remains the same, the future will be no different from the past.
A CVA is therefore not to be entered into lightly. It can very often be the step that saves a business and forms the foundation for future profitability, but very careful consideration needs to be given to every aspect of the business before it is embarked upon.
For more information please email us using the form on the “Contact us” page or call us on 01384 686 800 to talk things through or to arrange a free, initial, no obligation consultation.