How to Convert Assets into Cash – Know the Facts
As a business strategy, it is important that you know when and how to convert assets into cash. While liquidating assets is an essential part of bankruptcy procedures, companies also use liquidation as a means to free up cash, even in the absence of financial hardship. Generally the primary reasons to liquidate are to get rid of surplus or idle assets, to obtain additional working capital, or to pay off creditors. Before you begin the process, consult with your attorney and accountant or a professional tax advisor to help you through the process. Moreover if you intend to liquidate assets to satisfy creditors, you may need to obtain their consent to do so.
Convert Assets into Cash - Optimize Your Results
There is a process to convert assets into cash in order to get optimal results. First you need to do a thorough inventory and evaluation of all of the assets you wish to liquidate. Compile detailed information regarding the original purchase price, age, and condition of the asset along with quality photos. Do not forget to include records on warranties as well as repair and maintenance history.
Next consider how you want to market your assets to best achieve the liquidity you need. Liquidation sales and auction sales are two of the most commonly used ways to recover assets. A liquidation sale is the process of selling assets in an orderly manner over a longer period of time with the goal of realizing higher values that are closer to fair market price.
Auctions have the advantage of taking place very quickly from start to finish but may not draw as high of prices as a liquidation sale. This is where marketing can improve the outcome as competition among bidders is what determines the item's selling price, and more competition can drive a price up.
Strategies to use to convert assets into cash to realize maximum value:
Carefully evaluate your asset disposition plan by factoring in possible outcomes along with all of the costs involved. Look at the potential costs of not doing it (both legal and otherwise).
Consider listing your equipment with a liquidity specialist that has the resources and expertise to address your asset disposition needs. It not only minimizes the organizational disruption, it also outsources the process to a qualified third party who has the experience to help maximize returns
Find buyers by reaching out to your industry contacts including any equipment dealers, competitors, and suppliers
For equipment that is old, worn out or damaged, consider selling for scrap value or donating to charity (if possible) for a tax deduction
Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets. Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency. Please contact us for more information regarding your best options on how to convert assets into cash.