Published: 25/08/2020 By Jane Price
Early identification of business stress is very important when seeking to turn a company around which is why it is important to identify signs of stress, which include:
Deteriorating Results
•Declining profitability, in particular at an operating level
•Significant ‘exceptional’ costs
•Breached, waived or manipulated covenants
•Deteriorating Key Performance Inidicators (KPIs)
•Inability to explain trends in KPI
Reduced Liquidity
•Inability to meet interest payments or scheduled costs
•Poor or negative operational cashflow
•High non-operational cashflow
•Tight or reduced cash reserves (headroom)
•Trapped or restricted cash balances
Balance Sheet
•Creditor numbers and liabilities outpacing business growth
•Low asset to liability ratio
•Significantly under-funded pension schemes
•Investment in working capital ahead of growth
•Deteriorating credit ratings
Operational Challenges
•Removal of credit insurance
•Difficulties fulfilling orders on time and within quality parameters
•Increased use of ‘short-term’ cost reduction programmes
•Additional management time taken up managing stakeholders
We always suggest an informal chat as soon as the first signs of business stress arise, we offer a free no obligation first meeting. We can call you at a time convenient for you to go through the options that may be available to you and your business.
Call us today on 020 8661 7878 or email insolvency@turpinba.co.uk