Why does a company go bankrupt?

In a business landscape full of challenges, the need for sound and effective financial management is more evident than ever. Among the numerous factors that can bring a company to the brink of collapse, a shortage of financial resources stands out as one of the most crucial. After all, it is undeniable that financial health is the backbone that sustains any and all business operations.

It is essential to understand that the mere presence of revenue does not guarantee a company's survival. The lack of a strategic approach to managing these resources can quickly lead businesses into the financial abyss. The absence of efficient financial management is the epicenter of this problem, silently but devastatingly shaking the warnings of operations.

In conclusion, the main cause of business failure is lack of financial management, lack of long-term planning and lack of risk analysis and management. No, this is not a mere detail, no matter how solid the company and the market it operates in, there is always an imminent risk in the market that can trigger a series of disastrous events. A company, no matter how promising, is liable to get caught up in this vicious circle without the right guidance. It is therefore crucial to consider that financial management is not just a task, but a security that underpins the company's future.

Let's take the example of 123Milhas, which is an online travel agency that offers the purchase of tickets, accommodation and other travel services and products (such as packages, insurance and car rental). The agency said it had suspended packages and the issuing of tickets for its promotional line (with flexible dates), which has shipments scheduled from September to December 2023, and triggered a series of operational and legal problems for the company, which even filed for Judicial Recovery. For more information on the case, read the following article:  From Brazil's 2nd largest advertiser to judicial reorganization: learn about the history of 123milhas

Maintaining a successful company like Paylivre and ensuring its longevity and sustainability involves a set of solid management practices and consistent strategies. Here are some important guidelines to help prevent a company from going under:

Solid Financial Planning: Keep tight control of your company's finances. This includes creating a budget, monitoring cash flow and making realistic financial projections. Avoid excessive debt and look for ways to save money whenever possible.

Risk Management: Recognize and assess the potential risks your company may encounter. Keep a contingency plan prepared to deal with possible obstacles, such as economic downturns, resource supply issues or adverse natural events.

Competent Staff: Hire and retain qualified and committed employees. Your team plays a key role in the company's success.

Assertive strategic decisions: Connecting with the best strategic partners for your operation is one of the key strategic decisions to keep your operation safe and healthy with all the uncertainties and instabilities of the market.

Mature and Efficient Governance: refers to a well-established and optimized organizational system in which leadership structures, decision-making processes and control mechanisms are highly effective and transparent. In this context, management policies, standards and practices are rigorously applied, with the aim of guaranteeing an organization's accountability, integrity and strategic alignment. 

Remember that prudent management and adaptability are essential for the sustainability of any company. Even with all the precautions, businesses can face challenges, but adequate preparation can help overcome them and avoid collapse.

About Paylivre

Founded in 2019, Paylivre is one of the largest payment intermediaries in Brazil, developing solutions for borderless digital payments to companies around the world.

With a focus on the customer, deep knowledge of the market and passion for what we do, we conquer companies around the world and offer new possibilities in payments in Latin America in a practical and safe way.

Offer more security and protection to your user with our robust infrastructure and proprietary technology. Click here and discover how Paylivre can offer you the best borderless digital payment solution.