Businesses with Financial Difficulties: Knowing How to Communicate

When a company is experiencing financial difficulties, effectively communicating with all stakeholders is essential.

Each type of stakeholder has a role to play in your organization’s recovery. Here’s how it works.

Accountants (internal and external)

From the outset, the involvement of either internal or external accountants is crucial. They play a key role in preparing and providing accurate, up-to-date financial information.

This information allows you to better understand your company’s financial situation and make informed decisions. Furthermore, reliable financial statements establish your credibility with the other stakeholders.

Secured creditors

Secured creditors are the first group to be notified when you’re developing a business recovery plan. You must provide them with high-quality financial information without delay.

Meeting their needs is important since they may agree on a moratorium or payment relief schedule that could give your company some financial respite. As business partners, their support may be a determining factor in your organization’s survival.

Shareholders

Fully understanding the shareholders’ agreement and the resulting rights is essential. Shareholders must be consulted regarding significant decisions since they can provide liquidity that the company needs.

Timely communication is also essential, particularly where shareholders are not directors. This allows you to reassure shareholders that you can be trusted and actively involve them in the recovery process.

Employees

Providing employees with adequate and appropriate information helps them to remain engaged despite the financial difficulties. Business continuity depends on employee engagement so maintaining a bond of trust with them is vital.

Employees may also propose operational solutions to rationalize the company’s finances and improve efficiency.

Suppliers

Securing your supply chain is essential to ensuring the continuity of your operations. Identifying essential suppliers and maintaining their trust is important.

Regular and transparent communication with suppliers allows you to ensure the stability of trade relations and avoid inventory shortages that could worsen the company’s financial situation.

Trustees

Trustees are the only business recovery professionals authorized under the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA).

Trustees generally act as consultants for companies when it comes to developing a recovery plan and negotiating with all the stakeholders. Their expertise in debt and financial restructuring is an invaluable asset for guiding the organization through this difficult period.

Clear, precise and diligent communication with all stakeholders is essential for successfully navigating periods of financial difficulty.

Each stakeholder group contributes in a specific and complementary manner to your company’s recovery process. When you work together and maintain open communication, you can overcome financial difficulties and restore your organization’s stability and prosperity.