Other borrowing on balance sheet

[Zoon]

We have been approached by a potential customer and have checked their latest accounts and they have significant overdraft and loan debt but also another section listed under other borrowing.

Does anyone know what this could be attributed to? Given that it appears to be neither a loan or overdraft.

[Eric Mc]

It could be anything -

a loan to the company by a director
a loan by a third party individual or business

If they are being dishonest and trying to hid profits for tax purposes, they could be disguising some other form of credit balance as a loan - such as income that otherwise would be shown in the profit and loss account.

[Jockman]

Look under the Charges section on Company House details for the Company.

See if there is any body other than their Bank listed.

If not, ignore me and listen to Eric

[Eric Mc]

Looking for charges might be useful as it would indicate if a lender has taken a charge on the company's assets as security for a loan.

[anonymous-user]

Also looking at previous years’ accounts might give clues

Is there any mention in the notes?

[Zoon]

Thanks for the replies, there is a charge on all monies listed from the bank but that has been there a few years.
The worrying thing is there is £70k listed in other borrowing which wasn't in the previous years accounts and nothing mentioned in the account notes.

I think we will steer clear.

[Eric Mc]

I presume they have only filed "abridged" accounts at Companies House i.e. there is no profit and loss account filed?

[anonymous-user]

Seems a shame to immediately turn away business on the back of that imo

Have a chat with them and say that your credit control has an issue with their accounts.

There could be an explanation to satisfy you.

They could even offer to pay pro forma and not seek any credit from you at all

Edited by anonymous-user on Wednesday 12th September 10:25

[hyphen]

What he said. Talk to them.

[PugwasHDJ80]

Zoon said:

Thanks for the replies, there is a charge on all monies listed from the bank but that has been there a few years.
The worrying thing is there is £70k listed in other borrowing which wasn't in the previous years accounts and nothing mentioned in the account notes.

I think we will steer clear.

Surely at worst you'd put them on Pro-Forma until you had something of a history with them? That would be better than turning them away wouldn't it?

[Zoon]

PugwasHDJ80 said:

Zoon said:

Thanks for the replies, there is a charge on all monies listed from the bank but that has been there a few years.
The worrying thing is there is £70k listed in other borrowing which wasn't in the previous years accounts and nothing mentioned in the account notes.

I think we will steer clear.

Surely at worst you'd put them on Pro-Forma until you had something of a history with them? That would be better than turning them away wouldn't it?

Yes just to give a bit of background, pro-forma was suggested but they rejected that and seemed very keen for a full credit account from the outset which is what worried me.