Rescue is possible when the underlying business has a credible future and can fund the steps needed to reach it. The test is more demanding than believing that sales will improve. Directors need to know what cash the company requires, what creditors must agree to, and how the plan will work if a hoped-for payment arrives late.

1. Is the underlying business making money on its work?

Look at recent jobs or contracts after their direct costs, not just turnover. Are prices sufficient? Are losses caused by a temporary shock, or will every additional order consume more cash? A rescue plan needs to address the cause of the losses. A payment plan for old debts cannot fix a business that continues to lose money on new work.

2. Can the company fund the next few weeks?

Prepare a short cash forecast based on receipts you can reasonably expect, with payroll, tax, rent and essential suppliers shown on their due dates. Test what happens if the largest receipt is delayed. A profitable order book does not pay wages today unless the company has cash or reliable funding to complete the orders and wait for payment.

This is often the point at which directors need to decide whether taking further work would worsen creditors’ position. Take advice before making a commitment the forecast cannot support.

3. Which creditors would need to cooperate?

List the creditors whose support is necessary to keep operating: HMRC, a secured lender, the landlord, key suppliers and any creditor taking formal action. Ask what each would need to agree, by when, and whether the company can meet the proposed terms. An informal arrangement may help with a short disruption, but it does not bind a creditor who has not agreed and can be withdrawn.

An HMRC Time to Pay proposal requires payments the company can actually afford. A company voluntary arrangement is a formal proposal supervised by an insolvency practitioner and depends on creditor approval. Neither turns an unviable forecast into a viable one.

4. Where would the new cash come from?

If the plan relies on new investment, a sale of an asset, refinancing or a director’s own money, identify the amount, date and conditions. Is funding committed or merely being discussed? Would new security or a personal guarantee be required? A rescue that works only if an uncertain lender responds tomorrow is not yet a funded plan.

5. Are customers and operations likely to remain in place?

Consider whether important contracts can be delivered, key staff and suppliers will remain available, and customers will continue to place orders. A business can have valuable assets but no practical route to trade through the next month. Equally, a buyer interested in the business may create options that merit urgent discussion with an adviser.

6. Can the board act within the time available?

Put dates against each required step: a creditor response, funding decision, payroll run or court hearing. Decide who owns the cash forecast and who will speak to creditors and advisers. If a plan depends on more time than the company has, the board needs to consider an orderly closure alongside any rescue proposal.

Match the route to the evidence

The options include creditor negotiation, Time to Pay, a CVA and, in some cases, administration. Their purposes, costs and effects differ. An adviser can test which is realistic against the six answers, rather than selecting a procedure from its name. If the company cannot fund continued trading or reach a workable agreement, a Scottish creditors’ voluntary liquidation may be the responsible route.

Does having orders mean the company can be rescued?

Orders matter only if they can be completed at a viable margin and funded until customers pay. Forecast both the profit and the cash needed to deliver them.

Can we decide this from last year’s accounts?

Historic accounts help explain what happened. The immediate decision needs current cash, liabilities, a realistic forecast and the deadlines the company faces now.