Overdue payments

The client has received a Statutory Demand or County Court Judgement.

HRMC is chasing for payment and there is no time to pay agreement or the time to pay agreement has been broken.

Time is taken up “fire-fighting” creditors because they are not being paid in time

Suppliers are requiring cash on delivery

Wages day is a crisis day

If each month there is a worry about whether there are funds to pay the wages and PAYE and/or pension contributions are falling behind. Directors cannot afford to pay themselves from the business.

Balance sheet test

Does the company have a negative balance sheet – ie liabilities exceed the assets.  This can often be the case in the early days of a business but are an indicator that there is insufficient working capital or that shareholders are withdrawing funds as dividends when profits have not been sufficient to allow them.

Maximum borrowing

The business is operating at the limit of its overdraft and lending facilities.
Sometimes lenders will provide further funds but only if the business owners are prepared to offer personal guarantees.

A lack of management information

Even the smallest business needs to understand the business finances.  It is a bad sign if there are no systems in place to:

  • measure the profitability of transactions – taking into account fixed and variable costs
  • control debtors and guard against bad debts
  • control cash such as cashflow forecasts and bank reconciliations

Like all ailments financial ailments are most easily cured by addressing them early.  It is never too soon to get help it can be too late.

WWW.DMCrecovery.co.uk  email info@dmcrecovery.co.uk call 0161 4740920