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The Role Of A Business Administrator

A business administrator is a qualified business insolvency practitioner who is called in when a company is facing financial difficulties. The administrator’s role is to take over the financial management of the business — and first and foremost to try to get the business out of trouble and trading profitably again.

If business turnaround isn’t feasible, the business administrator will aim to get the best possible deal for the creditors. In some circumstances, the administrator has to fold the business, bankruptcy being the only option.

Once an administrator has been called in, the business is described as having gone ‘into administration.’

Why use an administrator?

An administrator can play a vital role in getting your company’s finances back on track. And whether you run a large corporation or a small business, administration is more likely to deliver a successful outcome if it is initiated sooner rather than later. Company directors can choose to call on a business administration service when it first becomes apparent that the business is failing — while there is still time to take action.

Leave it too late and you won’t have a choice — if creditors are concerned they won’t be paid, the court can call in an administrator.

What are the benefits of administration?

For a struggling medium or small business, administration can deliver a great deal of change, very quickly. The benefits include:

  • Access to expertise that can literally rescue your business
    Ideally, an expert in business administration with specialist knowledge in your field.
  • More time to pay debts
    The court can suspend payment to creditors, providing the administrator with more time to raise capital.
  • Objectivity
    An administrator has no emotional ties to the business and can make rational decisions needed to save it.
  • Resolution
    In any business, insolvency creates high levels of stress; turning things over to an administrator can come as a relief.
  • A way forward
    At its most successful, administration can define new working practices with long term benefits for the business and for its employees.

What does an administrator actually do?

A business administrator takes over the financial running of the business. Initially, he or she would:

  • Consider a Statement of Affairs provided by the directors of the company and review the situation to identify the problems and determine their causes.
  • Communicate with creditors and set up a meeting within three months to present a proposal for repayment.

Business insolvency can arise due to problems with cashflow, or because a business has liabilities that exceed its assets, or both. Depending on the situation, the administrator might:

  • Implement ways of improving cashflow
    For example through Factoring, Invoice Discounting or Debt Recovery.
  • Raise capital
    For example by selling some of the company’s assets or selling part of, or the whole business.
  • Reduce outgoings
    For example by cutting back on staff or downsizing the company premises.
  • Set up a Company Voluntary Arrangement
    Enabling the business to continue trading while insolvent.
  • Wind up the company
  • Remember, an administrator’s primary aim is to save the business.

How can you find the right business administrator?

Every business turnaround situation is different — you need an administrator with specialist knowledge in your field. At Touch Financial, we offer a free consultancy service to customers who are in or heading for financial difficulty. We’ll work with you to ensure we understand your business then introduce you to the most suitable administrator for your needs.

Remember, if insolvency is threatening your business, it’s wise to take action now. Continuing to incur debts, knowing you can’t pay them back, could lead to liability for wrongful trading. And finding an administrator as soon as possible increases the chance of a successful business turnaround.

To take the first step, contact one of our experts now – 0845 388 9725.

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