A construction business had their business bank accounts frozen by a commercial creditor this week when a receiver was appointed. The directors have a new baby and can’t pay their employees this week because of the bank account freeze…

Scenario’s similar to these are playing out all over Australia….the every day pressures of life coincide with the financials struggles of a business.

Appointing a receiver is one of the blunt tools in a creditor’s toolbox when lenders want to get their capital out of a struggling business fast.

Business struggles are not surprising in the current economic climate – with the cash rate having been increased 12 times since May 2022 (now steady at 4.10% since June 2023), many businesses are continuing to feel the pain of rate hikes.

A business owner in financial crisis may be attracted to a wide variety of business loans that are available to keep the business going. Best practice dictates that commercial lenders do not usually provide further funds to a struggling business that has little chance of meeting the repayments, however, as there is minimal regulation of commercial financial products, we see this scenario often.

If your client is considering applying for business finance (and you know they aren’t currently struggling) we suggest that you tell them to check if the commercial lender they are considering is a member of the Australian Financial Complaints Service (AFCA). In our experience, if the lender is a member of the AFCA, it may afford the business some extra protections if financial troubles hit down the track.  

However, if your client already has a commercial loan and lets you know they are struggling, time is of the essence in beginning negotiations with the lender.

If a business buries its head in the sand, it is likely things will escalate and some of the blunt tools (statutory demand, appointing a receiver, etc) will be used by creditors to recover funds from the business. Just knowing how to respond to these demands can create immediate stress on the business because of the strict time limits to respond to a statutory demand and / or the inability to access business bank accounts if a receiver is suddenly appointed. In our experience, most businesses only realise their bank accounts are frozen on the day it happens.

Many lenders are open to negotiations and fitting repayments into business affordability. Many lenders will also agree to reduce business debts. However, to access these options,  businesses need to act fast when they realise they are in trouble.  

Solve My Debt Now works to negotiate with business creditors for tailored solutions. Our aim is to help businesses avoid outcomes, such as selling business assets to repay debts.  Unsecured creditors may also receive more cents on the dollar.

Solve My Debt Now is therefore an alternative, holistic solution for businesses in trouble. Our debt relief solution aims to achieve any or all of the following outcomes for businesses:

  1. Negotiating with creditors for reductions and waivers in debts based on the current business circumstances.
  2. Negotiating with creditors to reduce or suspend payments on interest.
  3. Negotiating creditor payment plans within your estimated budget to make paying back business debts manageable over time.
  4. Where successful, avoiding a 5-year black mark on a business credit file in contrast to the outcome of insolvency.
  5. Where successful, avoiding a black mark on a director’s credit file for 10 years in contrast to the outcome of insolvency.
  6. Minimising contact between the client and the creditors where possible .
  7. a holistic business debt relief solution that is an alternative to immediate insolvency.

The insights you provide your clients at a difficult time in their business may be key to navigating their business challenges.

Though the economic terrain may seem daunting for an at-risk business, by providing clients with your specialised expertise, personalised guidance, and access to a diverse range of information,  you may help to guide them through their difficulties by offering tailored solutions for sustainability and growth.