Cash Flow Issues

Cash Flow Issues

Many companies that find themselves in financial difficulties tend to have some common issues:

  • Cash Flow - management of money in versus out

  • Loss of a large client / sales - sudden cash flow shock to business

  • Weak or lack of Credit Control Processes - outstanding debts

  • Regulatory changes resulting in business challenges

  • High Staff Turnover - Additional resource and time in training leading to lag in sales time and cash flow

  • Historical bad debts piling up hurting cash flow


The above can then have the knock on effect in the following areas:

  • Delayed payments to suppliers / HMRC - Depending on the situation it may be possible to come to an informal repayment plan with your creditors or if you are being pressurised then either a Company Voluntary Arrangement (CVA) or Administration may be suitable

  • Overdrawn Director's Loan Accounts - If a company fails with an overdrawn Director Loan Account then the Director would be required to repay the loan owed to the company. In the event of non-payment then Liquidator would look to recover this and this should pose a concern for the Director

  • Default on Personal Guarantees - sometimes it is necessary for Directors to provide a Personal Guarantee in order to secure funding. Whilst there is nothing wrong with doing this, if the company defaults on these repayments then your personal assets may be at risk and it is therefore strongly recommended that if you find yourself in this situation to contact us.

  • Entering into a formal remedy - the above may force a company to enter into a formal remedy if the company is deemed insolvent. Directors need to carefully consider whether to continue trading as it could have serious implications against them.


For help on this and other matters please feel free to contact us.