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What is Corporate Recovery?

Malcolm Tatum
By
Updated May 17, 2024
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Corporate recovery is a process that focuses on helping a business that has gone through a financial downturn to survive and eventually regain a profitable status. Much of this effort is made with the effort of professional accountants who can aid in organizing expenses to best advantage, allowing the business to be positioned for the recovery. In some instances, other professionals may be involved in the effort, aiding in reorganization efforts that include hiring new managers or others to help turn the company around.

The basic process of corporate recovery involves identifying the reasons for the decline and assessing what resources are on hand to bring a halt to the downturn. Once a solid understanding of how the company came to be in its current condition is obtained, it is possible to begin the cleanup process. During this phase, the idea is to assess which assets are on hand that can be used to bring some order to the company finances. This often includes the tasks of managing debt more efficiently and may even mean selling off some assets so that the core operation can continue functioning and generate revenue during the recovery process.

Once the assessment of company assets and finances are complete, some amount of reorganization is likely to occur as the corporate recovery effort continues. This phase may involve reassigning employees to new functions, eliminating repetitive job positions, combining others, and in general arranging the operation so that the most benefit is obtained from the resources on hand. This in turn helps to trim costs, allowing the business to retain more of its generated revenue. That additional revenue can be used to pay off debt and fund changes within the existing structure, moving the business closer to profitability.

In some instances, corporate recovery is a process that is managed internally, typically with the appointment of new executives or managers who oversee the process. It is also possible to outsource this process to companies that specialize in helping businesses that are failing to reverse the trend and become profitable enterprises once more. Since corporate recovery is a process that can take an extended period of time, the cost for outsourcing the effort can be significant. Assuming the effort is successful, this cost is usually offset early in the process, and can result in completing the corporate recovery in considerably less time than would be possible by attempting to manage the recovery without the aid of outside resources.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum , Writer
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

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Malcolm Tatum

Malcolm Tatum

Writer

Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
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