Company’s financial difficulties and their prevention

When a company has financial difficulties, there may be more to do than time to do it. However, longer working days will not solve your problems. Instead, try to focus on what is important, or how you can improve your business profitability. 

Even if payment difficulties continued for a long time, your company may never face a financial crisis or become insolvent. These situations can be avoided when you react to alarming changes and the signs of danger you detect as quickly as possible. 

Profitability is one of the basic prerequisites for business operations. A profitable company is able to cover all its costs with its profits, and make some profit, too. However, the operating profit does not give a sufficient idea of whether the operation is actually profitable. 

Learn about your company's profitability, liquidity and solvency using basic financial calculations. You can prepare a profitability calculation on the My Enterprise Finland service or download the YT4 calculation template from the website of the Finnish Enterprise AgencyOpens in a new window..

You can get help assessing your financial situation from

• Financial assistance for entrepreneurs
• your accountant
• your local business development.

If it is difficult to find money to pay invoices, you can reduce your company's expenditure, for example by

• finding cheaper options for compulsory costs
• streamlining work phases by eliminating any unnecessary steps
• removing unprofitable goods and services from the selection
• tendering suppliers
• concentrating your purchases for bulk discounts
• outsourcing activities that are not part of your core business
• reducing the costs of your private life if your company does not produce enough profit.

Also check from the tax administration that your company's prepayment tax (in Finnish)Opens in a new window. is not too high, and that all deductible costs and expense allowances have been taken into account in the taxation of your company.

Do not ever neglect the payment of statutory fees or salaries. 

You can earn more income by e.g.:

• improving marketing
• increasing sales to your profitable customers
• finding new customers and markets
• increasing the prices of your products
• arranging discount sales for products that otherwise remain in stock
• expanding the product range.

A limited liability company can also collect capital for the company by a share of issues.