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The life of a company director is not a long, quiet river. Admittedly, managing a company is a great adventure, often stimulating and rewarding, but this is not always the case. Sometimes a company is in financial difficulty. How do you deal with this situation? In this article, we explain how to manage and revive a company in difficulty.

Analyse the company and identify problems

It is important not to underestimate the situation, even in the case of slight difficulties. Indeed, these can grow in magnitude and, if they are not brought under control, can lead to the bankruptcy of a company. We therefore advise you to regularly analyse your business in order to identify its weaknesses.
 

How do you know if a company is in difficulty?

Carrying out an audit of your company allows you to take stock of its financial health. An audit consists of analysing all the company's cash flow and turnover in order to determine its profitability and highlight its problems. It is possible to carry out an internal or external audit of the company. The internal audit is carried out by the head of the company, with the help of his staff, while the external audit is carried out by audit professionals. The external audit is an excellent solution: it allows an in-depth analysis of the company by professionals with a fresh and objective eye on the situation.
 

Identify the causes of the problem

The management of companies in difficulty is not simple. Its success depends on the ability of managers to adopt a global vision of the company. To do so, they must refocus on their core business and unite their team around highly targeted objectives. It is also necessary to rigorously monitor the figures in order to identify critical points and areas of tension and to find solutions. Alarming signals can take the form of :

• A lack of cash flow
• Excessive stocks
• Of debts that accumulate
• Supply difficulties
• Manufacturing delays
• Rising costs
• Expenses in excess of turnover
• An increase in the number of disputes with customers
• A drop in orders
• An increase in the time taken to collect receivables from customers or to stop payments

Management of companies in difficulty

As you can see, a company's financial crisis often has its roots in cash flow problems. Knowing how to spot the signs mentioned above enables you to anticipate financial concerns and make the right decisions before the situation becomes critical.
 

Rester motivé, s'informer et se former au management des entreprises en difficulté

It is difficult to remain motivated when faced with a company's financial difficulties. In such a situation, every decision and the ability to act at the right time has an impact on the next steps. It is therefore essential, even in the absence of a crisis, to be informed and trained in the management of companies in difficulty. Trained managers will have a better ability to identify the weak points to watch out for in their company and to react before the crisis sets in.

What solutions for a company in difficulty?

There are several points to take into account in order to turn around a company in difficulty without making a false move. Our first piece of advice is to define a 12-month recovery plan. Planning your company's recovery over a fairly long period of time will allow you to correct all the problems one by one without overlooking anything. During this period, your objective will be to reduce unnecessary costs. To do this, you can, for example

• Determine the cause of your problems, preferably by calling in outside professionals
• Reduce your costs
• Increase your margins
• Review your cash management strategy
• Redefining your business model

What aid for a company in difficulty?

Legal and financial support

There are several types of aid for companies in difficulty:

• The ad hoc mandate with the commercial court: using an ad hoc mandate consists of requesting the assistance of a third party to identify and manage a company's financial difficulties from the commercial court.
• The CCSF (Commission départementale des Chefs des Services Financiers - Departmental Commission of Heads of Financial Services): referring a matter to this commission can allow you to benefit from discounts on any surcharges and penalties for late payment.
• Credit mediation: conducted by the Banque de France, this mediation can help reach an agreement with credit institutions such as banks. If the outcome of the mediation is positive, the company in difficulty will be able to reschedule a debt, obtain essential credit or obtain guarantees.
• The "Centre d'Information sur la Prévention des difficultés des entreprises": the CIP is an association made up of volunteer professionals. It helps companies to manage the difficulties they encounter. The volunteers of the CIP (chartered accountants, auditors, etc.) can propose various means and solutions to business managers in difficulty.

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The rights of companies in difficulty

Several collective procedures may apply to companies in difficulty. These procedures place companies under judicial supervision to help them organise the settlement of their claims. There are three types of collective procedures, applied according to the seriousness of the company's situation:

• The safeguard procedure: all the company's debts are frozen on the day the procedure is opened, after an observation period. A safeguard plan is proposed to the company to spread out the settlement of its debts. Continuation of the business is possible.
• Judicial receivership: this collective procedure concerns companies in cessation of payment. It leads to the suspension of surcharges, interest and proceedings against the company. It is spread over several years.
• Judicial liquidation: this occurs when the two previous options are not possible (when the company's financial situation is too critical). The company's debts are frozen, but the procedure puts an end to the company's activity. The business can sometimes be taken over in part or in full, subject to conditions and depending on the state of cessation.