Manufacturing Industry Today

Top Failure Warning Signs for Businesses

One in every 210 businesses went into liquidation in the first quarter of 2018 according to UK Government research*. We are also witnessing well-known household names such as Rolls Royce, House of Fraser, Marks & Spencer and Mothercare all taking drastic measures to save their businesses from insolvency. In response, the senior management team at Company Debt, a specialist debt and business recovery solutions firm, has released a detailed checklist and online test to help managers recognise the tell-tale signs before reaching the tipping point.
Published 21 June 2018
Company Debt has found that if two or more of the following apply, businesses can benefit from professional advice:
  1. An operating cash flow ratio of less than one
  2. Too many outstanding invoices waiting for payment
  3. No cash to pay creditors, who may be sending threatening letters
  4. Always operating at company overdraft limit
  5. Unable to pay employees
  6. Existing time to pay agreement with HMRC
  7. Lack of knowledge when it comes to management re-numeration either through salary or dividends
  8. Lack of ability to have financial information for up to date management accounts, or lack of input from accountant
  9. Large debtor goes bad creating a shift in how the cash flow of the business is going to work
  10. Over-reliance on one or two key customers for the business
  11. Legal disputes disrupting the ability of a director to run a business as it diverts time and energy
  12. Constantly dealing with problem/ firefighting?
In addition, Company Debt has developed a test which can be accessed at test for businesses to check their solvency status within two minutes.
Antony Smith, Managing Director at Company Debt said, “All too often, senior management leave contacting us too late, preferring to bury their heads in the sand when financial problems emerge. By seeking professional support earlier, organisations can avoid major company restructures and eventually liquidation. We’d prefer to support managers before they reach the winding up petition stage and are here to help guide them through the business rescue options, before they reach their tipping point into a crisis.”


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