It's good to talk

cash flow insolvency Oct 07, 2021

In tough and painful situations it can be tempting for business owners to struggle on, or live on hope, rather than acknowledging that it’s time to call in help.

It can lead to sleepless nights and a reduction in your ability to get a grip on the situation or make sensible decisions.

It will not solve the problems of mounting debt, the threat of County Court Judgements (CCJs) and insolvency.

I am here to take your calls if you’d like to talk to a real human being with experience of rescuing and turning around businesses.

Get a grip!

The first step to resolving business problems is to know exactly what the situation is.

K2 has a number of free tools for download that can help businesses to get a grip on their situation.

They include a Cash Management tool: https://lnkd.in/gr4bkxW

And if things have gone further there is K2's Guide to dealing with CCJs: https://lnkd.in/ghPgehx

So banish those sleepless nights and worries and get in touch.

Remember the old...

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Businesses will need agility and flexibility for the foreseeable future

cash flow planning Sep 23, 2021

Arguably we are in the greatest period of uncertainty in living memory.

A combination of geopolitics, the climate crisis, accelerating technologies, supply chain disruption, and the ongoing covid pandemic are creating the perfect storm for anyone running a business.

It’s unlikely to change anytime soon so it may be advisable for businesses to build agility and flexibility into their operations as a permanent feature.

From developing new products or services to using more automation, it may seem like a scary prospect, but that is not to say the situation isn’t manageable.

Who knows? In time it may become an exciting and enjoyable way of operating as you discover new and hopefully more productive and efficient ways of working.

To help you, K2 has a free briefing on the use of heuristics to improve your agile decision-making https://lnkd.in/g6XdRBTD

You will also need to know the business cash flow situation at any time to be able to operate in such a climate and...

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Winding-up petitions in detail

Although the restrictions on debt collection have been mostly lifted from October 1 2021, some limits remain on the use of Winding-up petitions by commercial landlords in respect of rent arrears until March 2022.

  1. Petitions can only be sought on debts exceeding £10,000 compared with the pre-pandemic threshold of £750.
  2. Creditors must give debtors 21 days to propose resolutions.
  3. WUPs cannot be used for pursuing commercial rent arrears but….

…the sting in the tail is that debtors will still be able to seek county court judgements to try to recover commercial rent arrears.

As always, I advise businesses in difficulties to manage their cash flow and to seek help if you are in difficulties.

You can download K2's free cash management tool here https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/37139976-4f42-454f-aff5-75ae4be992c7

Or message me if you need someone to talk to.

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Lessons and new opportunities from pandemic disruption

Business activity is starting to pick up after 18 months of disruption but what lessons have those that survived learned, what new opportunities has it brought and what new practices will businesses keep as a result?

Changes in customer and client needs?

A recently-reported development has been the numbers of staycation bookings for 2022 that are already being made after people decided to holiday in the UK in 2021 due to all the complex rules overseas travel and quarantine on return.

This presents an opportunity for the tourism industry to develop their attractions and offers, notwithstanding some of the difficulties there are in recruiting enough workers.

There may well be opportunities in other businesses in the wider economy to respond with new products and services based on what clients have asked for during the various stages of the pandemic.

Changes in ways of working

While some businesses needed to furlough staff because of a drop in demand during the pandemic others changed...

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Where are you heading?

cash flow Aug 27, 2021

If your business has survived the last 18 months of uncertainty you may be hoping that activity will soon return to “normal” levels.

But there is still a good deal of uncertainty about the future given the number of issues facing businesses.

The supply chain has been disrupted, both because of the pandemic and in the UK a shortage of HGV drivers following the decision to leave the EU. Surveys from the CBI lobby group show the worst manufacturing supply chain disruption since at least 1977.

Recruitment of suitably qualified staff and shortages of materials are also an issue even if a business can afford them.

Then, the Furlough help ends completely at the end of September and the Covid loans are having to be repaid.

All in all, making decisions about the future of your business is far from easy.

Some time ago I suggested the use of heuristics as a method of help in decision making in times of uncertainty and you can see my article here:

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Is it crunch time for your business at the end of September?

The Government’s furlough scheme to help employers through the pandemic is being scaled back, with wage support being reduced from 70% to 60% and employers’ contribution increased to 20% this month.

The whole scheme will end on September 30.

One survey carried out this week has found that an estimated 350,000-plus SMEs cannot now repay Covid loans due to the impact of cash flow and supply chains.

An estimated 18% of the survey participants reported that they intended to make redundancies while around 16% said they could not afford to pay existing staff because of the pressure of repaying Covid-related loans.

At the same time, it has been widely reported that businesses have been facing difficulties in recruiting staff in some sectors.

So what should businesses do?

Try to hang on to staff in the hope that business will pick up?

Make some redundancies now to improve their cash flow and hope to rehire staff in better times?

How you treat your staff will affect your...

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Pressure On Construction Businesses As Materials Are In Short Supply

cash flow May 26, 2021

Building materials are running short in the UK putting pressure on smaller construction businesses.

Supplies of timber, cement, steel, paints and some plastic products have been particularly affected leading to a prediction that materials prices could rise by as much as 7% this year.

More problematic is the effect the shortages may have on smaller construction companies to keep trading leading to cash flow problems, according to the Construction Leadership Council (CLC).

The Federation of Master Builders has said some building firms may have to delay projects while others could be forced to close.

The shortage is being attributed in part to a surge in DIY and building projects during lockdown as well as a surge in shipping costs.

The CLC has called on large construction companies to work with smaller builders to collaborate on bulk buying which the SMEs are unable to manage alone.

In the meantime I would urge SME builders to take advantage of our parent company, K2 Business...

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Insolvencies. Now is not the time to relax

cash flow insolvency May 20, 2021

The most recent Insolvency Service figures have revealed that company insolvencies are 35% lower than before the coronavirus crisis.

The report shows that 925 companies were declared insolvent in April compared with 1,429 in the same month in 2019 and 1,199 last year.

However, we are only at the start of recovering from various interruptions to business and from lockdowns.

Also, sooner or later the Government’s temporary restrictions on the use of statutory demands and on certain winding-up petitions will come to an end.

It is therefore likely that as businesses start to pay back their various Covid-related loans and other deferred payments, insolvencies will rise again.

Begbies Traynor’s most recent Red Flag alert for Q1 showed that 723,000 businesses were now in ‘significant financial distress1’, a 15% increase from Q4 2020 to Q2 2021.

Given all the above, we would urge businesses to continue to very carefully manage their cash flow and beware of...

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Loan repayments, price rises and supply chain issues – a perfect storm?

cash flow debt collection May 07, 2021

As government support for businesses during the pandemic comes to an end a combination of circumstances means it is more important than ever to keep a careful eye on cashflow.

Common sense would suggest businesses should be allowed time to return to full-scale activity and repair their cashflow before they start paying back business support loans or deferred VAT.

However, according to the FSB (Federation of Small Businesses) chief of external affairs Craig Beaumont members are reporting that they are already receiving repayment demands.

While the IHS Markit’s purchasing managers’ index (PMI) for manufacturing activity shows that the sector expanded at its fastest pace in almost 27 years in April they are also being hit by price inflation and supply chain delays.

As an example, British Steel has this month announced a price rise of £50 per tonne for structural steel, its seventh price rise since the summer of 2020.

Businesses needing help can access this survival...

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Cash flow and Bank management

cash flow Apr 28, 2021

The potential for unmanageable debt and for overtrading are identified as two key pitfalls for businesses as they seek to recover from lockdown.

In the latest red flag alert from Begbies Traynor warned that 93,000 more UK businesses had “weakened to the point of 'significant financial distress' in the quarter to the end of March”.

The company predicts that even more companies could slide into insolvency as lockdown eases, citing the reasons above as two likely drivers.

I have warned before about the dangers of overtrading, when a business tries to ramp up its activity too quickly, running up a big rush of sales on credit without the cash to pay its suppliers.

My advice is to always and stringently monitor and manage cashflow and beware of being misled by Balance Sheet figures, which can paint an over-optimistic picture because they include fixed assets and possible new money from investors.

 

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