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When should you apply for business rescue?

by , 06 February 2014
More and more businesses are applying for business rescue. And with no end in sight to the tough economic times, this trend is set to continue. This brings us to this question: When should your business apply for business rescue? Read on to find out.

According to Coach with heart, we live in a society that reveres independence and strength.

The site says it's this belief that has turned asking for help into a sign of weakness.

'As a result, not asking for help has left people stuck for long periods of time. '

The reality is asking for help isn't a sign of weakness. 'It's often the right thing to do. It accelerates the desired result. It frees you up to do other things, more important things.'

What does this have to do with business rescue?

Well, one may loosely describe business rescue as a cry for help.

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Business rescue explained

The Practical Accountancy Loose Leaf says if your business is insolvent and you're still trading, you can restructure and reorganise it through business rescue.

It's essentially your salvation and your last chance to get your business back on its feet.

When should you apply for business rescue?

Answer these questions first:

  • Do you have the finances to buy more stock?
  • Do you have the finances to pay all staff salaries?
  • Do you have the finances to pay all other debts as they become due?

If you've answered 'NO' to any of the above, continue to the next three questions.

  1. Can you get (or increase) overdraft facility?
  2. Can the shareholders put anymore finance into the business?
  3. Is there any more money from clients coming in?

The Loose Leaf says if you answer 'NO' to any of the first three questions, and you can't access funds from any of the last three questions, your business may be in 'financial distress' and you need to apply for business rescue right now.

Doing this may just save your business from a financial crisis.

Destiny Man says 'the objective of business rescue is to prevent the large number of liquidations that we are seeing in South Africa. It's hoped that this process will allow companies to survive and grow.'

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