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Turn business failure into success

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28th Jul 2015
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Encompass founder and CEO Wayne Johnson explains how accountancy firms can add value to the recovery

It might seem like a contradiction but rapid economic growth often also leads to more corporate insolvencies. In a thriving economy, entrepreneurs take chances. Rising liquidity levels are likely to give business people greater confidence in funding new ventures - but by the laws of attrition, that will also lead to more business failures. 

That’s where accountancy firms, with their own in-house insolvency practitioners, can step in and make sure value is pinpointed and extracted from ‘losing’ businesses in a way that sustains growth.

Even when a company fails, practices can help ensure that resource is fed back into the economy, or, where value has been created, it is captured and utilised again elsewhere. It might even be possible to develop intellectual property and still use it as an asset or leverage it in some way even if the founding business is no longer operating in its original form.

Yet, to make this process work, firms need to make use of tools that enable them to quickly pinpoint and extract value from an insolvency case. Indeed, they need to get cases completed quickly and efficiently in order to keep business value flowing, whether that means rescuing and recovering the business, paying creditors or releasing the company assets, including key staff, to drive new business creation.

Whatever the strategy, firms will need to gain a clear and early insight into the nature of the case, including the people, companies and assets involved.  That’s where automated analysis and visualising insolvency information comes into play, enabling firms to see relevant information at a glance and save time when investigating a company’s financial position.  The ability to use the latest visual information management technology enables practitioners to more easily and accurately foresee the complexities of a job from the beginning and make better decisions around which jobs to take on and how to allocate resources to ensure profitability. 

As we have seen the role of insolvency practitioners in times of economic growth is often underestimated.  The truth is they are often instrumental in rescuing and recovering struggling business or alternatively in preserving their value whether that value is in human resources or in intellectual property. And for many firms of accountants, technology can be the final link in delivering added value to an entrepreneurial economy, enabling recovery specialists to identify where the value is within a business and move fast to preserve it and extract it where they can.

Wayne Johnson is founder and CEO of Encompass Corporation, a developer of visual data management tools for insolvency professionals.

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