It’s no secret that UK businesses are facing some of the most challenging trading conditions in living memory.
As licensed insolvency practitioners and cash flow solutions specialists, we’ve put together a checklist of the most common signs that indicate a business may be heading for a financial crisis. Some are obvious, but others less so.
If you’re a business director, owner or CEO, it’s important to keep in mind that these signs may not necessarily mean a business is heading for failure. However, addressing the situation early is crucial to ensuring you have more options, including the potential to avoid business closure and insolvency.
What are the key signs a business is in trouble?
- Increase in bad debts or delayed payments
Are a significant proportion of your customers unable to pay on time or at all for goods or services you have provided?
- Difficulty paying bills or suppliers
Are you consistently unable to pay bills or suppliers on time due to cash flow problems? This can lead to a loss of credibility with suppliers, customers, and other stakeholders.
- Consistent decrease in sales or revenue
Has your business seen a substantial decline in sales or revenue in recent months or years? Are you facing increased competition and pressure from customers to drive down prices?
- Tax arrears
Is your business falling behind with HMRC? Are you struggling to pay VAT, PAYE/NI, CIS or Corporation Tax on time?
- Increase in debt or difficulty getting loans
Has your business taken on more debt or loans to support cash flow and are you worried about meeting repayment obligations? Is your business nearing the limits of its overdraft facility? Are you finding it difficult to get loans from banks or other financial institutions?
- High level of stock/inventory
If your sales are not keeping up with purchases, the amount of locked up cash can be a considerable burden.
- Loss of key staff and recruitment
Are you short-staffed and unable to meet customer demand? Have you lost a key member of your team? Are salary expectations unaffordable?
- Consistently missing financial targets
Is your business consistently missing key targets such as budgeted revenue or profit figures? Could this be due to poor financial planning or resource mismanagement?
- Poor financial and accounting records
Is your long-term decision-making and planning hampered by a lack of up-to-date financial and accounting records?
- Threats of legal action
Has your business received threats of legal action from creditors or suppliers or been served with a CCJ or winding-up petition?
- Stress, worry and lack of sleep
Running a business is challenging at the best of times. If your mental health and physical health is suffering, seek help from a trusted advisor.
If your business ticks three or more of the above criteria, you should review your business plan and seek expert professional advice.
As highly experienced advisors in business insolvency, debt recovery and financial support, BABR offers free and confidential consultations with no obligation to proceed.
We will listen to you, take the time to understand you and your company’s challenges, and offer honest and practical advice. We’re licensed and regulated by the Institute of Chartered Accountants in England & Wales and are also active members of R3 (The Association of Business Recovery Professionals), so you can have absolute confidence that you’ll be receiving advice from trusted, qualified financial professionals.
If you need expert support to find cash flow solutions at your business, get in touch with us today.