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How viable is your business, is it in financial distress?

It is reported that 720,000 businesses are now in significant financial distress, in a recent report published by Begbies Traynor, the 15% rise from the previous quarter was the largest increase since 2014.  Read the full article by the FT here.

With government support due to end later this year, maybe now is the time for directors to consider the position of their company and to pay particular attention to the debt that they are carrying.  If all their debts became due immediately, could they make the repayments?  Are you one of the companies considered to be in distress?

March 2020 saw many businesses close their physical doors to trading and some were able to successfully transition online but has it been enough?  If the business has been heavily reliant on government COVID funding from grants and loans and this has been the only reason they are still a business, is it time they look to see what more they can do to make their business viable?

We have come across many businesses who were not viable before COVID struck.  They were not turning a profit and therefore were not contributing to the tax pot by way of Corporation Tax.  They were however employing staff and therefore their staff are contributing to the economy through the PAYE system and by spending their wages on the high street.  But and this is the big question, if the company they worked for had to repay all their debt today would they still have a job?

We believe that directors obligations should include looking at the viability of their business and making an assessment based on their continuing trade.  Albert Einstein had the right way of looking at it “If you always do what you’ve always done, you’ll always get what you’ve always got”.

To determine if your business is viable, you cannot just rely on the data for the current year, you need to look back across several years and look at projections going forward, especially as it is likely that you would have altered the way that you trade.  As many business owners are busy working in their business it is easy to just ignore the numbers and keep doing as you are doing.  Seamount Accountancy works with our clients and evaluates the viability of their business.  All accountants are required to prepare a going concern statement to accompany statutory accounts and now more than ever that statement is going to need careful consideration.  We will always have that conversation with you even if we use the word ‘distress’, we will help you, every step of the way.

There is a question that many business coaches ask and that is “Are you working in your business instead of on your business?”  The reality is most business owners are doing both and probably failing to balance each.  Just having that face-to-face year end meeting with your accountants is a start to looking at your business from a different direction and if your current accountants isn’t having this type of conversation with you ask yourself, why not?

If you want to have a free no obligation conversation about your business please contact us HERE.

 

Do you want to know how we can help you?

We would be happy to discuss your requirements and put the most appropriate package together for you.

 
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