Company Failure

If you know what to look for, you can spot the tell-tale signs of impending failure and manage the situation so that if a client goes bust, it does not put your own business in jeopardy.

The sorts of things to look out for are:

• Cheque signatory never there
• Management changes/loss of key members of staff
• “Re-organisations” in the accounts department delaying payments
• Changes of bankers
• Delayed payments
• Simple non-payment
• Round sum “on account” payments
• Post-dated cheques
• Bouncing cheques
• County/High Court Judgements – especially from HMRC in respect of unpaid VAT or NI
• Winding Up Petitions
• Late filing of statutory accounts, annual returns, proposals to strike off, etc.
• Serious accident/disaster
• Business dependant on one or two key people
• Falling profit margins
• Dusty stock
• Shabby/run down offices/workshops/plant and equipment/vehicles
• Old technology
• Legislative restrictions on business

Any one of the above symptoms in isolation may not be a problem. However, three or more of the above signs is worrying because it suggests that there may be a pattern emerging.