Many closing businesses need to follow specific guidelines for liquidation auctions. With the coronavirus lock down mandates, many businesses are facing economic struggles. Specifically, many small companies don’t have enough resources to avoid financial crisis before it happens in this type of global situation. A lot of enterprises have decided to finally close their doors in the hopes of salvaging whatever money they can save from the venture. If you’re one of the many business owners who have been hit with the adverse effects of the pandemic, your company may have to go through liquidation. The process entails selling your assets and distributing the profits to your creditors, shareholders, and staff. One of the viable options you have is to go through a liquidation auction.
What Are Liquidation Auctions?
This type of liquidation procedure involves putting into auction any assets that a company owns, from its remaining inventory, office equipment, and even furniture. The primary advantage of this option is that it has a shorter turnaround time, which is valuable when your business enters liquidation since your assets can be sold as early as within 30 days.
Most of the time, business owners run to companies that offer this service, such as William George online auction house, because these providers have access to a large auction audience. This increases the chance that you can get a higher price for your assets since there will be more buyers competing for the goods.
The primary difference between holding your own liquidation sale and going for a liquidation auction is the type of audience you’ll be targeting. The former is ideal for retailers who can easily get back their capital by selling their unsold inventory to their current consumer base. However, companies in other industries, like manufacturing, might gain a bit more profit when they put their equipment up for auction.
Liquidation Auction Tips
Even if your company has to go through inventory liquidation, not all hope is lost. You still have to be wise and make sure that you get a good deal for your assets and recoup your losses efficiently. This means employing liquidation strategies that will maximize profits. This way, you’ll have enough money to repay your business’ debts as well as your shareholders and employees. Here are some tips that can help you:
1. Seek Professional Counsel
The most important thing you can do if you are facing the threat of liquidation is to speak with your accountant and lawyer for advice. They will be able to advise you on how best to handle your financial affairs and which asset management plan is best suited for you and your business. They will also be able to provide you with a suitable liquidation option that will ensure you do not become involved in a court battle, which is likely to cost you more money than the value of the assets that are being liquidated.
You need to understand what an asset management plan is, how it works and why it may be best for you to use one for your company. It is usually an arrangement by which a liquidator of an estate is allowed to take possession of a particular asset and then sell it in order to clear away debts owed to an accountancy or legal firm. If you have been forced into liquidation, it’s likely that you have some assets that are currently owed to other firms and you would like to clear them off so that they do not accumulate any further debts.
2. Prepare Your Assets for the Auction
If you plan to get your assets sold in a liquidation auction, then you must ensure that you have prepared all the documents for the auction, including any supporting documentation such as credit card statements, bank statements, tax returns, and other important documents. You should also ensure that all the documentation has been provided by the time the auction is scheduled for starting. Preparing all your assets will ensure that you get all your assets sold in an efficient manner. If you do not have enough time to prepare your assets for the auction, then you should go in for a specialist liquidator who can help you with this process. Often, it’s best for financial professionals to advise you on the straight line depreciation formula to determine your assets’ value. However, it is still essential that you have all the documents ready for the auction so that you can make sure that everything is done properly.
3. Determine the Liquidation Value of Your Assets
There is a big difference between how to determine the liquidation value of assets and how to determine the value of a company. There are several companies that offer such services which you may choose from. The liquidation value of an asset will be determined by various factors like the current market values and previous financial history of the assets.
If there are assets that might be difficult to auction off, you can opt to sell them for scrap value or donate them to charitable organizations in exchange for tax deductions. At the very least, you can get a return, albeit minimal, on your capital.
A liquidation auction is a viable option for businesses who need to close their doors to consumers. There are various reasons why an enterprise might face liquidation, one of which is the current coronavirus pandemic. Check out this guide and follow these tips to make the most out of your company’s situation.