At a time when pressures are mounting for businesses, it is important to keep an eye on key stress factors which could effect liquidity. Below is an overview of what to look out for. The earlier signs of distress are identified, the better.
Internal Issues
- Overstaffing
- Lack of management information and late providing information to accountants/auditors
- No business plan (cash flow forecasts)
- Large intercompany balances
- Directors Loan Accounts
External Issues
Customers
- Increase/decrease in debtor days
- Round sum payments on account
- Over-reliance on small number of customers
Suppliers
- Numerous new suppliers
- CCJs
- Increased creditor days
- Not paying non-trade creditors (particularly accountants)
Banking arrangements
- Expensive finance (peer to peer etc.)
- Facility fully utilised
- Returned direct debits
- Breakdown in relationship with funder
HM Revenue & Customs
- RTI PAYE & VAT returns not submitted
- VAT surcharges (2%, 5%, 10%, 15%)
- Historic tax planning schemes
- Pre/post-Covid arrears not being addressed
- High ratio of HMRC debt to turnover
- Regular payments to HMRC in respect of arrears without a formal plan in place
Solutions
- Engage advisers earlier the better
- IBR/Navigator review
- Critical cash flow management
- Time to Pay arrangement with HMRC
- RPO loan scheme to help fund redundancies
- Debtor review
- Recovery plan, refinance or insolvency event
If you have any questions or would like advice, get in touch on hello@lcbsg.co.uk.
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LCBSG Limited Registered in England No. 09209265 Registered office: Riverside House, Irwell Street, Manchester M3 5EN
Reach Commercial Finance Limited. Registered in England no 09056450. Leonard Curtis is a trading style of Reach Commercial Finance Limited. Leonard Curtis is a broker not a lender and is independent with access to the whole of market. We may receive commissions that will vary depending on the lender, product or other permissible factors. The nature of any commission model will be confirmed to you before you proceed. Authorised and regulated by the Financial Conduct Authority FCA no. 753686. Registered with the Information Commissioner’s Office reference ZA069234
Leonard Curtis Legal Limited is a limited company, registered in England and Wales with registered number 09820186. Registered office: Riverside House, Irwell Street, Manchester M3 5EN. Leonard Curtis Legal Limited is registered with the Solicitors Regulation Authority with number 626004.
Reach Commercial Finance Limited. Registered in England no 09056450. Leonard Curtis is a trading style of Reach Commercial Finance Limited. Leonard Curtis is a broker not a lender and is independent with access to the whole of market. We may receive commissions that will vary depending on the lender, product or other permissible factors. The nature of any commission model will be confirmed to you before you proceed. Authorised and regulated by the Financial Conduct Authority FCA no. 753686. Registered with the Information Commissioner’s Office reference ZA069234
Leonard Curtis Legal Limited is a limited company, registered in England and Wales with registered number 09820186. Registered office: Riverside House, Irwell Street, Manchester M3 5EN. Leonard Curtis Legal Limited is registered with the Solicitors Regulation Authority with number 626004.