Accounts losses and credit insurance
Discussion
Hello Ph'ers
My company of 12 years usually makes a £40-50k profit each year, however my accountant has just sent me our draft accounts (which are overdue!) and we made a circa £140k loss. Turnover is about £2m and yes, we are in financial difficulty, mostly with HMRC but we now have a 3 year repayment plan in place and hoping things get better.
One thing that did not come in to my mind until just now is how will my suppliers, their credit insurers, and my own bank look at this when their system pick up our accounts from CH? Will they pull the plug on credit lines overnight? If so that could spell the end of us! Perhaps I should 'stock up' just before just in case? I can get the company out of this mess but not if the rug is pulled from beneath me and I can't get stock!
Perhaps I should make best use of the 3 month extension and file at the last minute to give me more breathing space?
Also, I owe £20k in aged Corporation Tax which is on payment plan with HMRC. Can I carry back these losses 2 previous years, or more and get that down or cancelled?
My company of 12 years usually makes a £40-50k profit each year, however my accountant has just sent me our draft accounts (which are overdue!) and we made a circa £140k loss. Turnover is about £2m and yes, we are in financial difficulty, mostly with HMRC but we now have a 3 year repayment plan in place and hoping things get better.
One thing that did not come in to my mind until just now is how will my suppliers, their credit insurers, and my own bank look at this when their system pick up our accounts from CH? Will they pull the plug on credit lines overnight? If so that could spell the end of us! Perhaps I should 'stock up' just before just in case? I can get the company out of this mess but not if the rug is pulled from beneath me and I can't get stock!
Perhaps I should make best use of the 3 month extension and file at the last minute to give me more breathing space?
Also, I owe £20k in aged Corporation Tax which is on payment plan with HMRC. Can I carry back these losses 2 previous years, or more and get that down or cancelled?
The accounts being overdue will be a 'red flag' - in my experience invoice finance companies are reluctant to offer limits to companies with overdue accounts, and I would expect credit insurers to be the same.
Why not go on Experian and so what credit limit they will offer your business? A lot of credit insurers you these as a guideline.
Why not go on Experian and so what credit limit they will offer your business? A lot of credit insurers you these as a guideline.
cheekymeerkat said:
Hello Ph'ers
My company of 12 years usually makes a £40-50k profit each year, however my accountant has just sent me our draft accounts (which are overdue!) and we made a circa £140k loss. Turnover is about £2m and yes, we are in financial difficulty, mostly with HMRC but we now have a 3 year repayment plan in place and hoping things get better.
One thing that did not come in to my mind until just now is how will my suppliers, their credit insurers, and my own bank look at this when their system pick up our accounts from CH? Will they pull the plug on credit lines overnight? If so that could spell the end of us! Perhaps I should 'stock up' just before just in case? I can get the company out of this mess but not if the rug is pulled from beneath me and I can't get stock!
Perhaps I should make best use of the 3 month extension and file at the last minute to give me more breathing space?
Also, I owe £20k in aged Corporation Tax which is on payment plan with HMRC. Can I carry back these losses 2 previous years, or more and get that down or cancelled?
Ouch! I don't envy you on this one, I was in a similar situation for a business I have just taken over, but with tough decisions (that the previous MD wasn't prepared to make), I have managed to convert a serious loss into a profit with flat sales, a 900% increase in shipping costs and 10-20% increase in supplier costs.My company of 12 years usually makes a £40-50k profit each year, however my accountant has just sent me our draft accounts (which are overdue!) and we made a circa £140k loss. Turnover is about £2m and yes, we are in financial difficulty, mostly with HMRC but we now have a 3 year repayment plan in place and hoping things get better.
One thing that did not come in to my mind until just now is how will my suppliers, their credit insurers, and my own bank look at this when their system pick up our accounts from CH? Will they pull the plug on credit lines overnight? If so that could spell the end of us! Perhaps I should 'stock up' just before just in case? I can get the company out of this mess but not if the rug is pulled from beneath me and I can't get stock!
Perhaps I should make best use of the 3 month extension and file at the last minute to give me more breathing space?
Also, I owe £20k in aged Corporation Tax which is on payment plan with HMRC. Can I carry back these losses 2 previous years, or more and get that down or cancelled?
To answer your question, you may have issues with suppliers / their credit insurers, back in the day (in a different business) our credit insurer would immediately remove credit limits as soon as a company has a bad year, not ideal as that's when you need them!
Part of this will depend on your relationship with your suppliers and their ability to be flexible. Large corporates will have a set policy that is hard to get an exception to unless you are really important to them.
What line of business are you in? Do you need some external help to suggest some changes to the structure of the business?
foliedouce said:
Ouch! I don't envy you on this one, I was in a similar situation for a business I have just taken over, but with tough decisions (that the previous MD wasn't prepared to make), I have managed to convert a serious loss into a profit with flat sales, a 900% increase in shipping costs and 10-20% increase in supplier costs.
To answer your question, you may have issues with suppliers / their credit insurers, back in the day (in a different business) our credit insurer would immediately remove credit limits as soon as a company has a bad year, not ideal as that's when you need them!
Part of this will depend on your relationship with your suppliers and their ability to be flexible. Large corporates will have a set policy that is hard to get an exception to unless you are really important to them.
What line of business are you in? Do you need some external help to suggest some changes to the structure of the business?
I have good relationships with my suppliers who are mostly private import companies who supply me with stock. However I still think they would get itchy feet as I'm already stretching some payment terms by 2-3 weeks past due while cash is tight. Our business (retail B&M and online) is season with Spring and Halloween/Xmas being key.To answer your question, you may have issues with suppliers / their credit insurers, back in the day (in a different business) our credit insurer would immediately remove credit limits as soon as a company has a bad year, not ideal as that's when you need them!
Part of this will depend on your relationship with your suppliers and their ability to be flexible. Large corporates will have a set policy that is hard to get an exception to unless you are really important to them.
What line of business are you in? Do you need some external help to suggest some changes to the structure of the business?
I think I may be better of waiting until the end of the 3 month extension to file the accounts which will take me to the end of June. At least that will carry me closer to Christmas which is where half our money comes from and we can bounce back, and I would have already bought most of my Spring seasonal stock anyway. The risk of filing the accounts today and losing credit tomorrow for Spring stock could mean we don't make it to Christmas if everything goes to pro forma.
I have changed the structure of the business completely last year and retuned focus to the most profitable area's. It's working, but I just need more....time.
hepy said:
The accounts being overdue will be a 'red flag' - in my experience invoice finance companies are reluctant to offer limits to companies with overdue accounts, and I would expect credit insurers to be the same.
Just because their accountant is on the drag? More important I'd say is the trading loss. But then again he might have £10M in the bank, you don't know.Still haven't been able to pin down my accountant since I got the draft.
The balance sheet shows minus (£70,000) which is a worry as this means we were insolvent on paper last May? but we're still cracking on and debt is being paid down slowly but surely. How worried should I be about a negative balance sheet?
The Creditors falling due "within 1 year" shows some concerns as I know some of these debts are being carried over more than one year.
- VAT £65k - This is being paid over 3 years in agreement with HMRC. Can this be moved from that subheading?
- Other creditors £115k - This is a revolving credit facility which is no longer drawn on and is being paid down monthly over 3 years. Can this also be moved?
Also shows Directors Loan due back to me of £25k but it should say £4k so the balance sheet negative position is lower than it should be.
Our biggest asset is our stock. We also have a website and very well established eBay and Amazon accounts. Do these hold intangible value for the balance sheet?
The balance sheet shows minus (£70,000) which is a worry as this means we were insolvent on paper last May? but we're still cracking on and debt is being paid down slowly but surely. How worried should I be about a negative balance sheet?
The Creditors falling due "within 1 year" shows some concerns as I know some of these debts are being carried over more than one year.
- VAT £65k - This is being paid over 3 years in agreement with HMRC. Can this be moved from that subheading?
- Other creditors £115k - This is a revolving credit facility which is no longer drawn on and is being paid down monthly over 3 years. Can this also be moved?
Also shows Directors Loan due back to me of £25k but it should say £4k so the balance sheet negative position is lower than it should be.
Our biggest asset is our stock. We also have a website and very well established eBay and Amazon accounts. Do these hold intangible value for the balance sheet?
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