Categories
General

How is your self confidence?

We have been talking for several weeks about mental health and how important it can be to business owners especially given the current perfect storm of financial pressures they are facing.

While over-confidence can be dangerous, so too can another condition, known as imposter syndrome.

Originally thought to affect mainly high-achieving professional women, psychiatrists now believe it is more widespread and can affect up to 30% of business decision makers.

Imposter syndrome is characterised by a feeling of being a phony in some area of your life, despite any success that you have achieved in that area.

It can be undermining liked as it is to a fear that someday the person affected will be found out and exposed as a fraud.

There are several characteristics from the perfectionist, the expert, the natural genius to the super person and they all lead to an inability to be realistic about the sufferer’s achievements, competence and skills.

It leads to constant anxiety and a lack of the ability to believe in oneself. It may also lead to a belief that if as a business owner your business is in difficulties or insolvent, you are solely to blame.

To combat imposter syndrome sufferers should avoid comparing themselves to other people and avoid a constant push to perfectionism. Accept that everyone makes mistakes.

It can help to have a mentor and to talk to someone.

We specialise in offering practical help to businesses in trouble to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Categories
Cash Flow & Forecasting General

Agility, innovation and keeping your wits about you…

Agility, innovation and keeping your wits about you…

..will be needed to survive the current storm of financial and other crises.

There is no denying that the ongoing war in Ukraine and the consequent energy price rises have made the conditions for doing business even more challenging than they were before.

UK businesses desperately need help form the Government but have had to wait for weeks while a new leader is elected for the Conservative party.

So what can businesses do?

Passing escalating energy costs on to clients will be a tricky balancing act between remaining viable as a business and risking the loss of customers who are themselves under financial pressure.

Business leaders are going to need to be agile in order to respond to fast-moving changes in circumstances.

They will need to keep a firm grip on their finances and they will need to try to be innovative.

You can download our free cash management tool here to help stay on top of finances.

In terms of innovation, are there any systems you can automate to save money? Could you strengthen your business by collaborating with another, complementary business?

If you consider this, you will have to keep your wits about you and ensure that any agreements are legally crystal clear.

But also, keeping your wits about you means taking care of your mental health.  A stressed, worried business leader cannot hope to make sensible decisions so anything from taking regular breaks to walking in the country to recharge your batteries can help.

You could also find someone, like K2, to talk to about the situation your business is in. Book a free strategy and viability review here.

There is help and support available. Don’t be afraid to use it.

Categories
General Interim Management & Executive Support Rescue, Restructuring & Recovery

One person doesn’t have all the answers

Being the boss of a business can be a lonely place especially when times are as troubled as they currently are.

The temptation is to present a positive front and mask the worries for the reassurance of colleagues and staff.

But the stress of this can take a huge mental toll.

Nevertheless, friends and family will notice signs that all is not well.

They include:

  • Snapping at people.
  • Losing concentration
  • Putting off decisions
  • Restlessness
  • Emotional volatility
  • Anxiety
  • Erratic behaviour

Being supportive, sympathetic and encouraging is obviously important but so is encouraging the person to get help.

Talking to someone can help to bring perspective and reduce a problem like potential insolvency to manageable proportions.

That’s where K2 comes in.

Tony Groom has a wide range of experience ranging from acting as CEO and CRO (Chief Restructuring Officer) of AIM listed companies including the turnaround of a regulated investment company; through to smaller SMEs with turnovers of below £1m

We specialise in offering practical help to businesses in trouble to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Categories
Finance General Insolvency Rescue, Restructuring & Recovery

Mixed messages a sign of the times

Mixed messages are abundant right now. For example, when trying to ascertain the health of the construction sector, the following messages have all come out in news reports over the last couple of weeks: 

  1. That there’s an increase in construction firms seeking help from restructuring experts as builders struggle with the soaring cost of materials.
  2. That there’s an increase of companies in “critical financial distress”. Begbies Traynor’s latest Red Flag Alert report that this has increased by 37% in the past year, with construction groups among the hardest hit.
  3. That UK housebuilding activity has returned to pre-pandemic levels, according to industry body, the National House Building Council (NHBC).

Could all these reports be true simultaneously?

Of course they can, given the financial crisis currently affecting the UK economy.

Furthermore, it’s likely that many industries, not only construction, are being hit by this seeming paradox.

It is not looking as though things will get better any time soon, and the stress and strain this puts on the mental health of CEOs, business owners and boards is considerable.

Our message is: look after your mental health whether it is taking time out for a walk in nature or talking to someone about your worries.

That’s where K2 comes in.

Tony Groom has a wide range of experience ranging from acting as CEO and CRO (Chief Restructuring Officer) of AIM listed companies including the turnaround of a regulated investment company; through to smaller SMEs with turnovers of below £1m.

We specialise in offering practical help to businesses in trouble, among them in construction, to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Categories
Insolvency Liquidation, Pre-Packs & Phoenix

Directors be warned!

A business no longer has to be in formal insolvency before the Insolvency Service can investigate directors’ abusing their powers over Covid loans.

Since December 2021 the service has been given powers to crack down on company directors who dissolve their firms to avoid making repayments on government backed loans.

These powers are retrospective to allow conduct that took place before the law comes into force to be investigated.

So far the service has banned three individuals from acting as company directors, for dissolving their companies to avoid paying back Covid support loans.

Directors can be banned for up to 15 years under the new powers.

Last year, before the new powers were granted the service successfully petitioned the Courts to wind up five limited companies that have been involved in abusing government loans, introduced to help businesses during the pandemic.

Directors should be aware of their legal obligations to run their businesses according to the various laws and obligations outlined in law.

Directors’ duties in an insolvency are included in various Acts, including, but not limited to the Insolvency Acts 1986 and 2000, the Enterprise Act 2002 and the Company Directors’ Disqualification Act 1986.

See our LinkedIn post here.

Categories
Cash Flow & Forecasting

Shareholder pay-outs, investment and the balance sheet

The Balance Sheet shows the company’s assets and liabilities and how much money the business owes to suppliers at any one point in time as well as how much money it has in the bank. 

Central to this is the cashflow, which needs to be well-managed.

Given the current uncertainties over inflation, interest rate rises and the ongoing and well publicised Ukraine war, supply chain and recruitment issues it is more crucial than ever that businesses scrutinise the relationship between their debts and their equity.

A decade of cheap borrowing has, according to The Economist, resulted in a massive “borrowing binge”, where according to statistics compiled by Bloomberg average business indebtedness has risen to more than three times earnings.

At the same time, according to The Economist “The share of operating cashflows reinvested by American firms in new capital expenditure and research and development has declined over the past decade to 27%, from over 40% in 2009”.

Clearly, as Central Banks raise interest rates in order to try to control inflation, businesses need to be even more scrupulous in scrutinising their monthly management accounts, of which the balance sheet is one part.

They are likely also to need to adjust the ratio between investment, shareholder pay-outs and paying down as much debt as they can.

We have a free tool for you to download that can help you keep a watchful eye on your business’ financial performance. Download it here.

Categories
Employees

It is still important for businesses to protect their employees from Covid

Infections have been climbing again thanks to new variants and reportedly cases have risen by 29% in the UK in the last week.

The NHS is also struggling with large caseloads at a time of year when it usually has a respite.

Yet reportedly one in four people who have Covid are going to work.

While it is understandable that businesses facing a perfect storm of rising costs, supply chain issues and recruitment difficulties may be reluctant to let people take time off work, there is still much they can do to protect people.

Firstly, after two years of survival during lockdowns by using remote working, businesses can still allow people with Covid to return to remote working.

While regulations regarding Covid may have been removed, businesses should still be ensuring their workplaces are as safe as possible.

This means ensuring there is plenty of fresh air circulating, providing hand sanitisation stations and asking people to wear masks to protect themselves and others, especially in customer-facing roles.

Given the current difficulties in recruiting staff it makes sense for a business to demonstrate that it has employees’ wellbeing at heart.

Our Board Briefing is still worth a read.

Categories
County Court, Legal & Litigation Finance

Tough trading conditions are no excuse for fraudulent behaviour

According to the law firm Pincent Masons more than a third of UK company directors disqualified in April and May 2022 had abused the Government’s coronavirus loan or job support schemes.

37 directors were banned by the Insolvency Service for fraudulent claims in the two-month period and 140 had been banned for abuse of Covid schemes in the year to March.

Now the Chartered Institute of Internal Auditors is warning that ongoing tough trading conditions are creating the “ideal environment for fraudulent activity”.

And Financial Reporting Council (FRC) chief executive Sir Jon Thompson has warned of the “devastating impact fraud can have, including bringing entire companies to their knees” and called on directors to review and strengthen their internal controls to prevent financial losses.

During the Pandemic we published a Board Briefing to help directors to understand their duties and liabilities and at the time we made the point that it applied whatever the current situation.

It is worth having another read:

https://www.linkedin.com/pulse/directors-need-understand-duties-liabilities-whatever-tony-groom/

Categories
Employees

Keep your valued employees by giving them a stake in the business

The numbers of employee-owned businesses have more than doubled in a year, according to the Employee Ownership Association (EOA).

There are now more than 1,000 Employee Owned businesses in the UK, it says, compared with 500 in 2020.

As trading conditions become increasingly difficult thanks to a combination of factors, including the war in Ukraine, post-Covid supply chain disruption and the difficulty in recruiting skilled people, employers have turned to EOTs (Employee Owned Trusts) as a way of both spreading the risks in business and in keeping and rewarding staff for loyalty during the pandemic.

There are also tax benefits from turning a business into an EOT.

But there are a number of things to consider in structuring and formalising an EOT and it is important to understand exactly what a business is getting into.

The questions, according to accountants Price Bailey include:

  • What is the commercial purpose of an EOT?
  • Is it suitable for my business?
  • Who will be the controlling party?
  • Who will manage the EOT?
  • What is the market value of the company and what are the value of shares to be sold?
  • How will the share purchase be funded? And if the company is going to fund it, over how many years?

Businesses that have successfully converted to EOTs reportedly say that it improves social responsibility and keeps staff informed and engaged. It can also improve productivity.

If you are struggling with managing your business might an EOT be the way forward?

Categories
Cash Flow & Forecasting Insolvency Liquidation, Pre-Packs & Phoenix

Don’t give up!

According to PwC the number of UK firms filing for insolvency in the first quarter was broadly similar to the same period in 2021.

But they also reported: “when the smallest firms and companies that were liquidated when solvent are stripped out, the figures show those filing while insolvent more than doubled in the first quarter…”  (our italics).

But why would a solvent company go into liquidation?

Well, there could be a number of reasons, perhaps related to family or lack of successors.

However, given the number of economic headwinds, including inflation, supply chain problems, labour shortages and energy costs, as BDO has reported business optimism has fallen by 4.82 points to 101.93, for the second consecutive month, perhaps it should not be so surprising that patience is wearing thin.

Don’t throw in the towel just yet!

We would advise businesses to hang on in there, especially if they are still solvent, conditions will eventually turn around as they always do.

It can’t hurt to ensure that you take regular breaks to refresh yourself, perhaps go for a long walk, take time out with family, or indulge in a hobby.

Even for those that are insolvent there are alternatives to liquidation.

Firstly, get a grip on tracking the company finances with our free downloadable Cash Management tool.

Perhaps your business could pivot to meet these needs and at the same time strengthen its own future for growth?

Give us a call or message if you would like to talk to someone about restructuring possibilities for and investment in your business.

Categories
General

Lessons for business leaders from the Platinum Jubilee

70 years is a long time to have remained head of an organisation and to be dedicated to the duties it requires.

Yet the Queen has achieved this and retained the respect of most people, regardless of whether they support the idea of a monarchy or not.

She has often referred to the royal family as “the firm”, so are there lessons for business leaders who want to see their businesses thrive and endure for a long time?

The world has changed dramatically over this period, not only in terms of technology but also in terms of people’s attitudes and behaviour.

So, mastering the skill of adaptability while retaining core values is a skill business leaders should aspire to.

There may be times when it is necessary to pivot a business in a different direction.

Of course, leadership requires both dedication and hard work, but another attribute recognised in the Queen is courtesy. 

No matter to whom she is talking this is an attribute that she shows and one that business leaders perhaps could emulate.

Being treated with fairness, courtesy and kindness is likely to be rewarded with loyalty from colleagues and employees and encourages them to go the extra mile.

Of course, there is a considerable difference between ensuring the longevity of the monarchy and that of a business and one of the crucial aspects is being aware of a company’s financial position alongside its competitors at all times.

We have a free, downloadable tool to help businesses to keep track of and manage their finances.

It is available here.

Categories
Banks, Lenders & Investors Debt Collection & Credit Management Factoring, Invoice Discounting & Asset Finance Finance

Walk away!

The most recent survey of small businesses carried out by the FSB (Federation of Small Businesses) has found that at least a third of small businesses have seen late payment of invoices increase over the last three months.

Its new chair, Martin McTague, has called on the Government to include in the long-delayed audit reforms a requirement for a board-level role with responsibility for payments.

Small Business Commissioner Liz Barclay has urged small firms to be more “brave” and reject unreasonable payment terms.

She said: “Some small businesses are beginning to say, ‘No, I’ll walk away. I’m not accepting 90 days’.”

Ms Barclay argues that small businesses have more power than they think because they drive the success of larger companies and the latter “are putting their reputations on the line by failing to pay smaller suppliers on time.”.

Fine words, but can you afford to walk away?

Perhaps the question should be “can you afford not to walk away?”

After all, if you have done work for a larger company and they are delaying to pay for it, then you are effectively giving away your services for free, and your business still has all its own costs to pay.

Why should you risk insolvency in order to prop up a larger business?

Of course, you still need to manage your own costs and finances, and we have a free tool to help you.

Download our Free Cash Management Tool.

Categories
General Rescue, Restructuring & Recovery Turnaround

There are opportunities in even the grimmest situations

Research by the UK organisation Make UK has found that almost three quarters of UK manufacturers have reshored their supply chains as a result of the disruption caused by the Covid pandemic and more recently the war in Ukraine.

“Nearly half (42%) of manufacturers have increased the proportion of suppliers based in Great Britain, with further reshoring in the pipeline for over two-fifths of companies,” according to their report.

This, together with the change in consumer purchasing habits moving to more online shopping has dramatically increased the demand for warehouse space.

According to latest research by Colliers, industrial occupiers are in a race for space as the UK is experiencing the lowest level of supply ever recorded, with only 18.1 million sq ft left, due to demand for logistics units continuing to be driven by the structural change in consumer spending patterns. 

Colliers states that take-up in 2021 for industrial distribution warehouses of 100,000 sq ft+ reached 50.7 million sq ft, up 3.6 per cent year-on-year, a new record for the sector.

The Make UK research also found that “manufacturers are looking to increase or maintain their current investment into supply chain technologies over the next two years.”

Despite the almost-daily dire news on costs, recruitment, raw materials prices and so on it is clear that there are opportunities in adversity for some businesses.

Perhaps an existing business could pivot to meet these needs and at the same time strengthen its own future for growth?

Give us a call or message if you would like to talk to someone about restructuring possibilities for and investment in your business.

Categories
Employees General

Are there situations where process automation produces a worse result?

A shortage of candidates amid a high demand for staff has for some time been a complaint made by businesses.

The competition for suitable people has led to their offering higher starting salaries for new staff.

But the question has to be asked: how are they going about the recruitment process?

For several years now, candidates have been assessed using AI (Artificial Intelligence).

This method has become increasingly sophisticated as candidates are now being asked to answer standard interview questions in front of a camera while the software behind it notes thousands of barely perceptible changes to posture, facial expression, vocal tone and word choice.

Some companies selling AI recruitment tools even offer a reactive, AI-powered chatbot that will conduct the entire interview process.

But there have been examples of eminently qualified people being rejected at the first hurdle by these methods and in one recently-reported case and employee with a long track record of work with various high profile publications dis covered his application had been rejected because he had not reached the required score in a test that seemed to bear no relation to the skills needed for the position.

He queried it unsuccessfully and after filing a claim with the Information Commissioner’s Office in the UK was awarded £8000 in compensation. In his view the fault was in the software that was “weeding out good candidates”.

There have been reports of candidates who scored highly on most tests but found themselves excluded perhaps because of age, or an employment gap of longer than six months or because they were missing just a couple of skills from a very long list.

It must be remembered that software is written by human beings and human beings have inherent biases of which they may be unaware, not to mention that they can make mistakes.

At the moment there are no standards for checking whether an AI-based selection process is fair and unbiased although there are reportedly plans in both the UK and USA for bringing in national standards.

In the meantime, while the use of AI tools in the recruitment process may be useful at some stages potential employers should think carefully before applying them too widely.

Categories
Cash Flow & Forecasting Insolvency Rescue, Restructuring & Recovery Turnaround

Insolvencies are rising fast

Insolvencies are rising fast

But don’t give up now when help is at hand

The insolvency service figures for the first Quarter of 2022 make grim reading with totals at their highest since 2012.

Of the 4,896 insolvencies in England and Wales in Q1 4274 were creditors’ voluntary liquidations.

The Begbies Traynor Red Flag alert put the number of businesses in “critical distress” as up by 19% compared to the same quarter in 2021.

All this makes grim news for businesses that have survived the two years of disruption due to the Covid-19 pandemic and despite considerable ongoing cost, recruitment and supply issues have been hoping for at least some improvement in their activity levels.

The most vulnerable, according to Begbies Traynor, are the hospitality and construction industries.

But businesses should not give up when there is help at hand. The sooner you act the higher your chances of survival.

We are experienced in assessing every aspect of a business and coming up with workable plans for restructuring your business to survive.

Why not book an initial call to talk through your options.

Contact us

Categories
Employees

Taking the longer view

Could taking on apprentices be a better business solution to the staffing crisis during the current economic uncertainty?

It is understandable that following the easing of all the Covid pandemic restrictions businesses should be keen to go all-out for growth and therefore recruiting qualified staff.

But recruitment itself is currently a problem and in the face of all the other pressures including supply chain issues, rising energy prices and of course the Ukraine war, perhaps a slower, steadier approach would be more sensible.

Consolidating the current business and planning ahead would ease some of the pressure and this is where taking on apprentices may be a better way forward.

For businesses that are below the threshold of a £3 million payroll there is no apprenticeship levy and there is financial help for both taking on and training apprentices. There is a £1000 incentive payment for taking on an apprentice.

Then, depending on the size of your business, you pay just 5% towards the cost of training and assessing an apprentice and the government will pay the rest up to the funding band maximum.

If you employ fewer than 50 employees, the government will pay 100% of the apprenticeship training costs up to the funding band maximum for apprentices aged 16 to 18 or 19 to 24 with an education, health and care plan provided by their local authority or has been in the care of their local authority.

You must pay them the national minimum wage for their age group but if they are under 25 and on an approved Government apprenticeship scheme you don’t pay NI.

The FSB has a lot of useful information on its website to help smaller employer considering the apprenticeship route.

Thinking longer term could be a good way of protecting your business and preparing it for future growth.

Categories
Employees

The post-Covid restriction dilemma for bosses and employees

Restrictions may have been lifted but Covid levels in the community are still high and this can cause problems for both employer and their employees.

If someone contracts Covid the advice still is to self-isolate for at least five days.

However, this could result in employees losing three days of the statutory sick pay available from the Government, leaving them with just two days sick pay if they abide by the rules. SSP in the UK is just £96.35 per week.

To make matters worse, lateral flow tests are no longer free, so there is also a risk that someone with mild symptoms that are similar to a cold may not test themselves at all, carrying on working and risking spread of the illness to other colleagues.

In a previous post we advised employers to complete a health and safety risk assessment that includes the risk from COVID-19, provide adequate ventilation, clean more often and to ask people with COVID-19 or any of the main COVID-19 symptoms to stay away and enable them to work remotely.

But is there more employers can do to protect their businesses and their workforce in this situation?

Here are a couple of suggestions:

Firstly, employers can protect their workforce and help individuals to isolate if necessary by buying stocks of Lateral Flow Tests and making them available to employees.

Secondly, if they have a workplace sickness scheme, it may be worth introducing sickness pay from day one in the specific case of a Covid infection.

The benefits are obvious albeit you may have to pay a little to reap them.  

It will encourage employees to do the right thing while protecting their income.

It will protect the rest of the workforce and ensure minimal disruption to production and at the same time will send out a message to employees that you do value them and care about their welfare.

Given the difficulties businesses are having in recruiting and retaining staff, it will help you to keep loyal employees.

Categories
Rescue, Restructuring & Recovery

A New Industrial Revolution?

How feasible is it to reshore our industries?

The Office for National Statistics has reported that the UK has suffered “significant challenges when acquiring and maintaining their stock”.

Well, no surprise there as businesses have been well aware that a combination of Covid, Brexit, higher energy prices, events like the blockage of the Suez Canal and, of course, now Russia’s ongoing war in Ukraine has disrupted the global supply chain.

But this week the paper CityAM is asking whether now is the time to bring manufacturing industries back into the UK, aka “reshore” them to ensure not only supplies of essential but also growth.

While not underestimating the challenge, the paper points out that the UK “is still the ninth largest manufacturing country in the world, producing £183bn of products and employing 2.5m people”.

Reshoring, it argues, will have benefits, including reducing products’ carbon footprint, reducing lead times and delivery costs.

It quotes the organisation Made UK which says that already “40 per cent of reshoring is returning from China, over 30 per cent from Eastern Europe and almost 20 per cent is returning from India.” 

All this is, of course, easy to say but much harder to turn into a productive and practical reality, not least how to finance it.

But if you think your business could benefit from a restructure or pivot to bringing it back on shore and eventually growth why not call us for a preliminary chat?

You can message us via LinkedIn or email or call for an appointment.

Categories
Cash Flow & Forecasting Insolvency Rescue, Restructuring & Recovery

Don’t despair, do what you can

How you can protect your business in the current difficult climate

As increased taxes, war in Ukraine and Covid staff absences continue to make the business recovery climate difficult there are worries that insolvencies will increase dramatically in the coming months.

Indeed, Begbies Traynor reports that the number of company insolvencies in February was 23% higher than the same month last year with county court judgements against firms doubling.

But there are some things you can do to mitigate the risks.

  1. Know your financial position. You need to be able to keep track of your finances to be able to take action. Our free, downloadable cash management tool will help you do that. Find it here.

2. Covid has not gone away. All the restrictions may have gone, but the pandemic itself has not. Protect your staff by 

  • Completing a health and safety risk assessment that includes the risk from COVID-19
  • Providing adequate ventilation
  • Cleaning more often
  • Asking people with COVID-19 or any of the main COVID-19 symptoms to stay away and enabling them to work remotely

3. Be aware of your responsibilities, especially directors’ liabilities. As of March 31 temporary restrictions on the winding up of companies were lifted. This means the legal regime governing insolvency has returned to its pre-pandemic approach. Our article here is not only about surviving during the pandemic, it contains details of directors’ duties in insolvency

And finally:

4. Share your worries; You can call or message us via LinkedIn or call for an appointment to discuss your business situation and find out how we may be able to help you.

Categories
HM Revenue & Customs, VAT & PAYE Insolvency Rescue, Restructuring & Recovery Turnaround

A problem shared…

The start of April sees a number of additional burdens placed on businesses.

In addition to increased National Insurance contributions, there are the ongoing problems of supply chain issues and higher energy prices.

Also, the remaining temporary measures to protect insolvent businesses by restricting winding up processes have now ended and as of this month, businesses now have to pay back all VAT deferred in the period to June 2020 under pandemic reliefs.

As if all this were not enough, changes made to the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 in February this year put directors under increasing scrutiny from the Insolvency Service by extending its powers to investigate the conduct of directors of dissolved companies. 

This makes it harder for businesses to use creditors’ voluntary liquidation (CVL) process to close down an insolvent company.

a problem halved?

Many CEOs and directors struggle on in silence sharing none of their worries about the state of their businesses perhaps for fear of being seen as weak, or of encouraging predatory creditors to take action, or because they simply don’t know where to turn.

Whatever the reason, doing nothing is really not an option.

Talking to somebody trustworthy who is on their side can often help to reduce a problem to more manageable proportions and help to come up with solutions.

Insolvency does NOT have to mean the end of a business.  It is possible it can be saved by a radical overhaul and restructuring.

That’s where we at K2 Partners come in. Restructuring is what we do and we have many years’ experience of successfully turning around companies even where their directors have almost given up hope.

That’s why we say:

A problem shared is a problem halved.

To find out if there is a way you could pivot your business to survive and grow why not message us, email or call to discuss and clarify your ideas? 

What have you got to lose?

Categories
General

Promises, promises but not much help right now

Hard-pressed businesses already facing a perfect storm will hardly have been cheered by the 5% reduction in fuel duty announced in the Chancellor’s Spring Statement.

There will also be business rates discounts of 50% for eligible retail, hospitality, and leisure properties from April 2022.

These were the only measure to be introduced immediately and, as has been pointed out, the cut in fuel duty is unlikely to make much of a dent in fuel costs given the price rises already seen in recent weeks.

Apart from these, everything else was promises for the future.

Among them were future possible tax cuts on business investment, uprating the employment allowance, adjustments to the Apprenticeship Levy and extensions to R&D tax credits. 

The director general of the BCC (British Chambers of Commerce) said the announcement “falls short of the action businesses needed to see” and one local county Chamber director said: “it’s almost as if they [business owners] and the trading realities they face aren’t being fully comprehended in Whitehall and Westminster.

While it may be true that there is limited room for manoeuvre thanks to the effects of the ongoing conflict in Ukraine that have added to the price and supply chain issues as a result of the Covid pandemic, businesses, upon whom the country’s economy and prosperity depend, needed to see much more decisive action to support them.

With insolvencies almost doubling year on year, many companies are on the brink right now and need urgent help.

K2 Business Partners are there for you as restructure and turnaround professionals. Contact us if you’d like to talk.

Categories
Cash Flow & Forecasting

Being in business is a risky business

Businesses have been operating within a very uncertain climate ever since the beginning of the Covid-19 pandemic but now their stresses have been compounded by the war in Ukraine.

According to a report in CityAM the majority of investors managing around $1trn in assets are expecting an equity bear market this year and are slashing their exposure in response.

Risk management and building resilience: 

Dr Gianluca Pescaroli is a global expert in risk management, and more specifically in how businesses and other organisations can best plan for, and cope with, the impact of a crisis.

He says: “You need to have a very, very clear idea of your critical processes and services. These are essential, independent of whether it is a pandemic, or Ukraine, or climate change. The better you prepare, the better you adapt and react.”

The little things are important:

While pricing and supply issues need to be addressed you should also have a checklist of vulnerabilities for everything needed to keep operations flowing smoothly.

These can be such simple things as whether your top managers still a landline at home as a back-up in case mobile networks fail. In the office, have back-up generators in case of power supply loss and more than one staff member trained in operating them.

Alternative/back-up suppliers are essential especially with so many Russian providers now sanctioned.

Costs: can you Reduce overheads – by System automation, Outsourcing or Innovation?

It may be that you can renegotiate payment agreements with your existing regular suppliers to your mutual benefit. Remember they too will be hurting thanks to all the disruption so having reliable agreements in place may suit them too.

Cash reserves – can you increase them?

To answer this question your board needs to know exactly what the business finance position is at any moment in time. You can easily keep on top of this if you download our free cash management tool here.

Categories
Debt Collection & Credit Management HM Revenue & Customs, VAT & PAYE

There’s no place to hide!

Don’t ignore communications from the tax man

From the end of June last year, as I reported, HMRC has resumed its pro-active approach to tax collection and enforcement.

Since then, it has collected more than £5.8bn and prevented a further £11.2bn in revenue being lost through its investigations activity, according to newly published research by Pinsent Masons.

This represents a total collected of £30.8bn, an increase from £28bn collected in 2020.

The research found “HMRC has been taking a “tougher stance” on tax errors and avoidance in the past year and ramping up compliance activity as it looks to make up for the shortfall.”

HMRC also has recently acquired greater powers to give joint and several liability notices to directors, shadow directors and certain other individuals connected to a company if it becomes insolvent. This means that people who do not appear on the director register can also be pursued. 

HMRC has always been known to favour issuing winding up petitions on businesses with significant tax liabilities, particularly when it receives no response to its communications despite repeated attempts.

While there is no denying that times are tough for businesses as they struggle to return to normal activity following the pandemic, supply chain shortages, rising energy prices and now the instability produced by Russia’s invasion of Ukraine, it is still better for a business to discuss its situation with HMRC and if possible try to negotiate time to pay its liabilities.

You need to be able to prove the financial difficulties you are having and that’s where our free, downloadable cash management tool can help.

You can find it here.

And if you would like to talk over the options for restructuring your business K2 can help. Just message or call us.

Categories
Banks, Lenders & Investors Cash Flow & Forecasting

Is your bank manager supportive?

Now, perhaps more than ever, a business’ relationship with its bank is going to be crucial.

With interest rates rising along with inflation and energy prices, there is even more pressure on businesses than there was at the height of the pandemic.

As restrictions ease and Covid loans have to be repaid, at the same time businesses are keen to return to full production and activity.

It is likely you will need your bank manager’s support and if you haven’t previously taken the trouble to cultivate a good relationship it is time to start doing so.

Key to this is convincing them that you are on top of your business finances, and our free to download cash management plan will help you to know your situation and demonstrate it to your bank.

You can download it here.

But to convince your bank that you are on top of things the manager will want to see evidence of integrity, that you have a plan setting out clearly what support you need and that the plan is convincing, not only that it can work but also that you can deliver it.

Latest figures from the Insolvency Service for January this year showed that the number of corporate insolvencies had doubled compared with January 2021. Moreover, there was a prevalence of liquidations rather than companies going into administration, suggesting that these businesses had no way forward for their survival.

To protect your business it makes sense to ensure it has access to funds for survival and growth when it needs them and key to that is the relationship your business has with its bank.

This article from K2 looks at what you can do to ensure the bank’s support.

Have a read and message us if you’d like a chat.

Categories
General HR, Redundancy & Trade Unions

Could your business handle a four-day week?

The UK is launching a four-day workweek trial from June to December 2022 (a six-month period where participating employees will see no loss of pay.

It has also been reported that 30 UK businesses had already started a trial of four-day weeks from January 2022.

But is it a practicable proposition for your business?

The results of the trials that have been carried out so far in other countries have shown that it improves workers’ quality of life, giving them more time for other priorities.

They have also, so far, shown that there was no loss of productivity and in some cases businesses have increased sales, reduced absences from illness and improved employee retention.

There is also an argument that the system could have environmental benefits from reduced commuting and traffic congestion.

However, it is questionable whether the four-day week can be applied in all businesses, not only because of the primary consideration of their customer’s needs but also because of the nature of the business.

According to the website Investopedia “it may not be possible to increase productivity enough in service or logistics jobs to achieve the same results in fewer hours just by working smarter. There’s a physical limit to how many items Amazon Warehouse employees can pick per hour or how many delivery locations a UPS driver can hit in a day.”

This is echoed in research carried out by the Henley Business School, which found that 82% of employers “believe ensuring employees are available to the customer outweighs the need for flexible working practices” and 73% felt it would be difficult to implement logistically.

Clearly, any business considering introducing a four-day working week will have to consider the implications carefully and be prepared to make radical changes to their business practices and ways of thinking.

Investopedia lists strategic changes businesses may have to make. These are just some of them.

They would have to prioritise and re-evaluate tasks, minimise interruptions and distractions, increase automation, limit work-based social events, reduce and shorten meetings, define clear goals that are achievable within a shorter workweek and measure outcomes, not hours.

It will be interesting to see how businesses react once the various proposed trials have been completed but it is already clear that there will be no “one size fits all” solution.

Categories
General

Do you really need all your employees to return to the office?

The guidance to work from home was one of the restrictions that was recently lifted along with several others that had been introduced to try to control the spread of Covid 19 infections.

The signs are that many have resumed the road or rail commute to the office as traffic numbers are steadily rising.

Was this a knee-jerk reaction by businesses desperate to return to normal? Or was it actually necessary?

Did they ask themselves whether they really needed all their employees to return to work in their centralised office locations?

Given that the economy of the country, and by extension of many businesses, is facing severe pressures as they seek to recover from the damage of the pandemic it will be crucial for businesses to keep a tight control on costs.

There are two factors in particular that are important to assessing whether a return to office-based working is actually necessary.

They are levels of productivity and business expenditure.

The LSE (London School of Economics) researched the effects of the pandemic work from home rule on productivity and found that not only can it actually improve productivity but can also reduce cases of burnout by as much as 26%.

But it stressed that businesses should take measures to ensure the model thrives including creating remote-work policies that detail expectations for employees, managers, and teams and training managers in managing remote teams inclusively.

Hitachi Capital was one of many organisations that researched the effects of working from home on business costs.

It identified five areas for potential costs savings during the period when employees were working remotely which included employee food and drink, employee travel, cleaning services, catering client meetings and rent and utilities.

Of the 250 SMEs surveyed it found “on average SME businesses (70%) saved up to an impressive £840 monthly. This is a cost that could total up to £10,000 annually for these companies”.

Such savings could make a significant difference to business survival in a time or rising costs.

When K2 Business Partners acquire a company or start working with directors to make improvements, one their early tasks is to take a fresh look at all the business systems and practices.

This is because every business falls into habitual ways of working that might have worked for years but if they are not updated, they become a costly burden.

The first step is to have an accurate picture of the business cash flow and this is where K2 can help. We have a free Cash Management tool that you can download here.

Take a look, apply it to your business and see where you could make savings and if you’d like to talk your ideas through message us on LinkedIn or give us a call.

Categories
Business Development & Marketing Cash Flow & Forecasting Insolvency

Keep your nerve and stay patient

As restrictions imposed to control the Covid pandemic are lifted it would be tempting for businesses to ramp up their activity in order to return to pre-pandemic normal.

But problems remain. Materials and components costs have been rising, and still are. The global supply chain is still broken. Recruitment difficulties and labour shortages are still an issue.

Getting all these components right and working smoothly is a bit of a jigsaw puzzle.

We have talked about this before but it seems to be relevant again now.

There is a danger in ramping up activity too quickly as the situation eases. Accountants call it over-trading.

This is when a business runs up a big rush of sales on credit without the cash to pay its suppliers and it can rapidly become insolvent.

It is easy to be misled by the figures on the balance sheet, which may paint an over-optimistic picture of the cash flow forecast, especially when some of this is predicated on fixed assets and on the prospect of new investment from lenders or investors.

Instead, the business should focus on cash management, which gives a much more realistic picture of assets and liabilities.

You might be interested in this blog written some time ago about the psychology involved.

Categories
Insolvency Rescue, Restructuring & Recovery Turnaround

Insolvency is not the end of the business story

Figures just released by the Insolvency Service showed a 33% increase on the number registered two years ago, just before the pandemic.

The IS report also identifies a 73% two-year increase in creditors’ voluntary liquidations, where bosses elect to place their company into liquidation in order to pay its debts.

But is insolvency really the end for a business?

There are four main definitions of insolvency:

  • Unsatisfied statutory demand: failure to deal with a statutory demand
  • Outstanding judgement: failure to pay a judgement debt
  • Cashflow test: when the company is unable to pay its debts on time
  • Balance sheet test: when a company’s liabilities are greater than its assets

But no, this doesn’t mean the end of a business although it is an indication that decisive action is needed. This can involve either turnaround, transformation or possibly a pivot of the business.

Turnaround usually involves making an existing business more efficient and generally this will involve cutting costs which can involve brutal downsizing if a company is losing money. The focus is on existing activities that are profitable and perhaps returning to the core business.

Transformation involves revisiting the business model or product/market mix.

The pivot process involves keeping some essential elements but everything else will be changed.

Deciding which is the best for your business will involve a close examination, a strategic review. A business needs to be sustainable and profitable so firstly you need to identify the resources that are already available to you and these can be divided into physical resources, human resources, intellectual resources and financial resources.

There is more on this in our post here.

Banks and other secured lenders are always significant stakeholders in any company and the loss of bank support usually represents an existential threat to the business.

So your relationship with your bank may prove to be crucial and our Board Briefing may help you assess this.

K2 Business Partners are hands-on investors and turnaround specialists whose aim is to ensure your business’ survival and growth. Obviously, there has to be at least a possibility that your business can be made viable, so our first step is to do an exhaustive review of every aspect, from finances and liabilities to processes.So don’t despair. If you would like to find out more why not book a discovery call to talk to us. Book a call.

Categories
Accounting & Bookkeeping Debt Collection & Credit Management

Two heads are better than one

As the deadline approaches for the submission of annual tax returns it has emerged that some businesses are realising that they have claimed incorrectly for covid support.

Law firm Pinsent Masons has analysed data that showed around twenty-five professional services partnerships have admitted to overclaiming furlough, with the total amount wrongly claimed coming to £309,588.

It is not surprising given the various modifications that were made to the scheme during the height of the pandemic, they suggest. It is also likely that these numbers will increase as more returns are submitted.

According to HMRC there are over 1,200 staff currently investigating 23,000 cases of suspected fraudulent Covid claims.

It says “Work to recover fraud and error began almost as soon as the schemes launched. We recovered £500 million of overpayments in 2020 to 2021”.

Do you know whether your business has claimed legitimately for covid support?

At a time when businesses are facing rising energy, payroll and materials costs and are still a long way from being back to normal operations the last thing you need is to be adding to the financial burden is having to pay back wrongly-claimed moneys.

Can your accountant help you? It is worth getting them to check the fine print of any claims you have made and verifying that they were legitimate before you put in your tax return. An early warning is always better than a sudden shock!

If you have been using our free, downloadable cash management tool you should be able to give your accountants a clear financial picture of the state of your business.

It’s available free here.

Cash management is going to be essential in helping businesses to both know where they are in 2022 and to help them move forward.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting

Happy New Year!

We hope you all enjoyed the festive break and were able to refresh, regroup and think ahead for your business in the year ahead.

Unfortunately, there will still be a lot of pressure as there has been over the last two years because the pandemic is not yet over.

Among these are:

Costs – from the impact of rising inflation which has led to the Bank of England increasing interest rates.

Costs – due to the current high price of energy supplies.

Costs – due to businesses having to start to replace loans granted in the earlier stages of the pandemic.

Costs – due to late payments by other businesses, something that the Federation of Small Businesses (FSB) has highlighted as a problem for 30% of the SMEs it surveyed recently.

Costs – due to impending increases from April in National Insurance contributions, the living wage and dividend taxation, something the FSB has also highlighted.

Can you see the recurring theme here?

Is it affecting your ability to put into action any new plans for your business that you identified at the end of the year?

If you need an accurate picture of exactly where your business is financially in order to identify whether you have the room for manoeuvre to take your business forward, we have a tool that can help you.

It’s free to download here.

Cash management is going to be essential in helping businesses to both know where they are in 2022 and to help them move forward.

Categories
Cash Flow & Forecasting General

How does your supply chain stack up?

Materials, parts, products; they have all been subject to delays and shortages over the last year thanks to a combination of factors from a shortage of lorry drivers to the effects of pandemic lockdowns.

It has all made running a business more stressful and expensive.

Is it time to rethink your supply chain?

Many businesses switched to buying from suppliers further afield because of the financial savings this brought them, but perhaps given the more recent difficulties it might be worth looking for sources closer to home.

It may end up costing a little more but if it improves your business’ continuity it may be worth it.

Reshoring is also becoming increasingly important for improving UK manufacturing resilience and ensuring that its manufacturing supply chains are fit for an uncertain future.

Perhaps you need a back-up plan?

It is also worth looking around for alternative suppliers and using more than one, again to ensure the continuity of your own business operations.

Giving orders to a back-up supplier as well as your main one could minimise disruption to your own business.

There have been some welcome indications that materials supply issues have eased a little in the construction sector with the November PMI data from IHS Markit and CIPS showing total activity for November at 55.5, compared with 54.6 in October. Fewer respondents were reporting longer than usual delivery times, down to 47% from the previous month’s 54%.

The end of the year is the time for reflection, recharging the batteries and a little planning ahead.

So once the Turkey has been eaten and the presents opened perhaps the run-up to the New Year is a good time to think ahead to make your business more resilient.

Categories
Banks, Lenders & Investors

Is it time to rein in the Rentiers?

Businesses have now faced more than two years of uncertainty thanks to the constantly-changing environment caused by the Covid 19 Pandemic.

It is estimated by Begbies Traynor in its latest Red Flag analysis that in the third quarter of 2021 562,550 businesses were in “significant financial distress”, with a 17% rise in “more serious critical business distress”.

What businesses need, therefore, is some measure of calm and steady progress as far as any business can ever rely on these things.

Investors are among the most important in providing these conditions.

But for years now, many investors have been what are called “rentiers”, interested only in short term gains from the money they put into a business without being particularly invested in the future of that company.

Rentiers are deemed to be willing to shift their money elsewhere if they feel their rewards are not large enough or fast enough.

While no business would deny that it has obligations to deliver results for customers, shareholders and other investors, it is reasonable in these uncertain conditions to ask that investors show some patience and understanding.

The Government, as reported by CityAm, has invested in this idea by creating “British Patient Capital (BPC)” to which has committed more than £1bn of commitments itself.  This has so far attracted further £4.8bn of investment from third parties.

Ultimately, supporting a business and paying attention to its longer-term survival can only benefit investors looking for some security and stability on their returns.

It is a philosophy upon which K2 Business Partners is founded and acts whenever it gets involved in supporting any business in difficulty.

Of course, our involvement depends on a thorough analysis of the state of the business, but you can be sure that once committed K2 is with you for the long haul.

Categories
General

Are you really listening?

The difficulties businesses are having in recruiting staff at the moment have been widely publicised and two recent pieces of research may have some clues as to the reasons.

Firstly, the most recent quarterly survey run by Future Forum, a research group backed by the business communication platform Slack has found that management are keener to see staff return to their offices rather than to continue working from home.

While 44% of executives were anxious to get back to what they saw as “business as normal” more than three-quarters (76 percent) of employees said they wanted flexibility in whether they work from home or the office.

The second piece of research, carried out by the online magazine Wired in conjunction with orgvue, which analyses workforce and HR issues, found that attitudes to work and the behaviour of the workforce is rapidly changing, with many employees re-evaluating their careers post-pandemic and choosing to resign from their existing positions in search of more favourable conditions.

One theme that emerges from these pieces of research is that there is a disconnect between executives and their employees as the former’s working conditions, remuneration and freedom of manoeuvre are considerably greater than they are for employees.

Clearly, working from home during pandemic lockdowns has prompted the formerly office-based employees to look more closely at these issues for themselves and the result has been that many want a change, that there will be no return to pre-pandemic normal if they can help it.

Essentially, the message is that there needs to be a change in the attitudes and behaviour of the bosses to demonstrate that they are concerned for their employees’ welfare.

This is not only about money.

People need to feel valued, listened to and that their wider concerns and responsibilities are understood, that their knowledge and skills are important and incorporated into the company’s structure and organisation.

Businesses can expect there to be less certainty going forward and will need to incorporate more flexibility into their operations.

For this they will need to rely even more on the skills and adaptability of their employees.

While there is certainly a need for strong leadership, the best leaders are those who consult and really listen to what their employees, those “on the front line” of their businesses, can tell them.

There is a reason why we have two ears and one mouth.

Are you really listening and are you willing to adapt to changed conditions?If your organisation is struggling to cope with uncertainty and you would like to talk over your ideas with an experienced turnaround adviser please call us.

Categories
Business Development & Marketing

Are you a risk taker?

It is generally held that a business that tries to survive at its current level is one that is destined to stagnate and fail.

Development and growth are therefore essential for business survival.

But making the moves to grow and change without the certainty of success can be a frightening prospect, even if it is essential to survival.

Yes, of course, you cannot plan for or guard against everything unexpected that might happen when you take the plunge but there are ways to make sure what you are doing is a calculated risk.

It is important to know your business well.  That means regular scrutiny of management accounts and monitoring of the products or services that have consistently done well as well as identifying where there is room for additional ones to be developed.

Having accurate and up to date records is therefore crucial and even more so is regularly reviewing them.

Our free cash management tool can also help with this and is available for download here.

A useful method of assessing the state of your business is to carry out a SWOT analysis. This is an assessment of the Strengths, Weaknesses, Opportunities and Threats in the business.

Strengths and weaknesses are internal to your company—things that you have some control over and can change. This would include who is on your team, your patents and intellectual property and your location.

Opportunities and threats are external. These are things over which you might have no control but identify where you there might be advantages and where you need to protect your business. Examples include competitors, prices of raw materials, and customer shopping trends.

In the current business climate with all its uncertainties a SWOT analysis will at least give you a framework within which to operate and to identify where you can at least take some risks to grow your business.

You may also find this paper useful: https://www.linkedin.com/pulse/decision-making-times-market-economic-uncertainty-tony-groom/

And remember, if you want someone objective to talk through your ideas with we are always here.

Categories
General

Are your directors up to speed with their duties?

As the Insolvency Service is quite rightly vigorously pursuing those who have made fraudulent claims for help during the Covid crisis, they are likely to be scrutinising all businesses more closely.

The number of company directors convicted of criminal activity during the pandemic has risen 205% to 122 in the year to 30 September, up from just 40 for the same period to 30 September of last year. The National Audit Office has also estimated that up to 60% of Covid BBL claims could be fraudulent or defaulted on.

There are plenty of other pressures on businesses and in particular their directors in trying to return to more normal activity in the face of a disrupted supply chain, rising energy prices and recruiting difficulties.

But it is not all doom and gloom. Times like these can also be seen as an opportunity to take a close look at what your business is offering and whether it can be tweaked to better meet the current conditions, not least the climate crisis.

It also seems a good time to remind directors of the statutory duties that they need to be mindful of.

Directors’ duties are defined by:

Common law, by specific legislation such as the codification contained within the Companies Act 2006 and by general statutory compliance to other laws, including, but not limited to Health & Safety at Work etc Act 1974 and its subsequent Regulations, the Corporate Manslaughter and Corporate Homicide Act 2007, the Employment Act 2008 and its associated Regulations, the Competition Act 1998, the Supply and Sale of Goods Act 1994, the Data Protection Act 2018 and General Data Protection Regulations, the Money Laundering Regulations 2007, by Anti-discrimination legislation covered by Race and Framework Directives and many more.

You can find out more about the details governing directors’ behaviour here.

Categories
Turnaround

You CAN save your business and the planet!

It is all too easy to get buried under the weight of bad news and the pressures besetting businesses when your business is not going well.

Most recently Begbies Traynor predicted that insolvencies were rising, reporting that there had been a 51% increase in Country Court Judgements in the third quarter of the year compared with the previous quarter. 

But this is only the negative part of the story.

Now is also a time of opportunity!

There is another way to look at things, especially in the light of the discussions taking place at the Cop26 on climate change in Glasgow.

If your business is in difficulty and you are at a loss as to how to recover perhaps it is time to ask questions.

Is your product or service going to contribute to the need to reduce carbon emissions and help stop climate change or is it an example of a technology that is outdated?

Perhaps instead of trying to restore your business to the status quo ante it is worth thinking about how you could develop it to become more environmentally friendly or to contribute to new, more environmentally ways of doing things?

Remember, the autumn budget promised more help for businesses with R & D in the form of increased government spending and of increased tax credits to businesses to carry out R & D for innovative new products and services.

As you know K2 Business Partners is interested in investing in businesses as part of its efforts to help them restructure.

For some time, we have been involved in a business that has developed a system of Insulated Concrete Formwork systems for external walls and foundations to enable customers to build more eco-friendly, low energy homes. Not only is the process more eco-friendly, it is also faster and at a lower cost.

So we have some experience in helping businesses turn around and rebuild for a more sustainable future for themselves and the planet.

Is there a way you could pivot your business to do the same?

Why not message us, email or call to discuss and clarify your ideas?  What have you got to lose?

Categories
Banks, Lenders & Investors Interim Management & Executive Support Rescue, Restructuring & Recovery

Why not call on some fresh talent and investment?

As if businesses did not have enough to deal with as they strive to get their businesses back on track following the turmoil of the last 18 months now there are predictions that interest rates will have to rise to damp down inflation.

The Bank of England (BoE) governor, Andrew Bailey, has been reportedly arguing for the move arguing that forecasts of inflation rising to 4% if they should happen are twice the 2% target set for the BoE.

Is this the last straw?

It could be for those businesses paying back covid- loans if those loans were not given at fixed interest rates.

You don’t have to lose your business, however.

While there is no denying that restructuring a business can be challenging for its board and founders it can be a better option than throwing in the towel, provided you get the right kind of help.

Unlike other restructuring experts we at K2 have a history of building a portfolio as owners rather than remaining as just advisors. We focus on buying companies in distress to grow for our own portfolio and we have 20 years’ experience of doing this.

The emphasis is on Partnership, hence our name. We are with you for the long haul.

Obviously, there has to be at least a possibility that your business can be made viable so our first step is to do an exhaustive review of every aspect, from finances and liabilities to processes.

You can use our free cash management tool to itemise the details of your business’ financial circumstances to help you to provide us with the information we will need.

https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/0a02193a-12a8-432b-8b19-81bc4f8a8b74

Categories
General Insolvency Rescue, Restructuring & Recovery

It’s good to talk

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.

K2 is 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.

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

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

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

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

Remember the old adage: “A problem shared is a problem halved”.

Categories
General HR, Redundancy & Trade Unions

Are you a good employer?

It may not be high on your list of priorities with Furlough ending and the struggle to survive and return to peak activity foremost in your mind.

Even if you have had to make some people redundant your reputation as an employer matters.

As your business hopefully returns to more normal levels of activity there may come a time when you will need to recruit more people, and that is going to be a challenge when there is a shortage of workers in many sectors.

While redundancy may feel like a brutal process to those on the receiving end, how it has been handled can make all the difference to your business reputation.  

Did you keep staff fully informed? Did you follow all the correct procedures? Did those affected feel that you cared about them and their concerns?

We explained how to do it properly in this article:

https://www.linkedin.com/pulse/planning-redundancies-after-furlough-discontinued-tony-groom/?trackingId=YDCO8nDCs6wYlCRNM2wlKw%3D%3D

But we were reminded that there is more to treating employees well when a CEO, as reported in the media, advised employers not to sack an employee for making a mistake.

Instead, he said, after his company had lost a large account, he started what he calls “the blameless post-mortem”, to see whether the company’s systems were at fault, rather than an individual. 

In that instance the findings were that there had not been enough people in the sales team to enable each employee to take proper care of the clients that were under their responsibility.

There will be many other instances of things that can be done better in your business and if approached in the right way, with the engagement of employees, they are more likely to see your business as one they would be happy to work for and to pass that message on to others.

It’s not about the perks you give them but about how well you convey that you value them and understand their concerns too.

Categories
Cash Flow & Forecasting

Businesses will need agility and flexibility for the foreseeable future

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, we have 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 we also have a free download to help you with managing cash flow.

https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/37139976-4f42-454f-aff5-75ae4be992c7

Please do get in touch or message us to talk over your ideas.

Categories
Cash Flow & Forecasting County Court, Legal & Litigation Debt Collection & Credit Management

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

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

Or message us if you need someone to talk to.

Categories
Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Turnaround Options – Can the business be saved?

Thank you to Carol Baker for including us in her article ‘Business Recovery Part 2: Turnaround Options – Can the Business be Saved?‘ for AccountingWeb.co.uk.

Business Recovery part 2: Turnaround options – can the business be saved?

By Carol Baker

In our first article in this business recovery series, we looked at how you can spot the warning signs that a business may be struggling and offered practical advice on how to support clients at risk of failing. In this second article, we’ll look at how a turnaround specialist can offer an alternative to insolvency.

Many accountants make the mistake of thinking that to turn around a struggling business you must enter a formal insolvency process. This is not always the case as Mark Blayney, turnaround specialist at K2 Partners explains, “Turning around a business is more than just restructuring the balance sheet – it is about strategy and reorganising the whole business to make it into something that is viable going forward.”

“The danger happens when directors say, ‘Let’s go into a Company Voluntary Arrangement (CVA) and write-off 75% of the value of our creditors’ believing they have turned the business around. No, you haven’t turned your business around, because you have failed to address the fundamental underlying problems which got you there in the first place.”

It is important to distinguish between the ‘company’ and the ‘business’. Often a business can be saved, but not always the company’s legal entity, especially when there are conflicting interests amongst the directors which have brought the company close to insolvency.

At this point, the question becomes ‘Can the business be saved?’

A turnaround specialist is like a polymathic crisis manager who has a deep and complex knowledge that they can call upon to solve specific problems, and to do so – fast!

They have a unique ability to come into a business and take hands-on responsibility for delivering the actions required. This means in the early crisis management stages they have to quickly analyse the situation – often having to work with inaccurate and incomplete data – and use their intuition to make decisions. 

These decisions need to be made without emotion or influence from shareholders, directors or management. The highly analytical mind of turnaround specialists gives them unique behavioural skills and a management style which oozes creditability and trust. They bring calm to what is often regarded as chaos, but this stabilisation is only the first step. Real turnarounds then require rebuilding and reorganising the business for secure growth.

A two-step process for business turnaround

Whilst some turnarounds can be done with the company name and the business intact, at other times, the ‘business’ may need to be put into a new vehicle – simply because there is too much baggage associated with the company. But ultimately, turnaround is all about transforming the business including its strategic focus and operations.

First, there is the stabilisation phase – getting more cash into the business to pay staff wages and provide immediate working capital. A turnaround specialist’s first priority is to quickly get control of cash and cashflow such as finding non-essential costs to see where cash is being diverted unnecessarily, and produce a comprehensive (and tested) cash management forecast that identifies the areas which are fundamental for the business’s survival and growth.

“As independent advisers, turnaround specialists don’t have the emotional attachments that directors have, so it is easier for us to go to a lender or creditor and negotiate a repayment plan,” says Tony Groom, turnaround investor at K2 Partners.   

“Not only is this preferable to the director giving a personal guarantee – but suppliers are normally paid on a proforma basis, while a payment plan for old debt reduces the exposure, and secured lenders receive ongoing reports about the business and the turnaround initiatives as to reassure them about continuing with their support.”

A greater awareness of the funding tools available   

“We work with a range of funding solutions and have a deep knowledge of the market and where to source finance,” continues Groom.  “As such, we are well placed to advise directors how to facilitate restructuring of the debt by selecting the right financing option that will free up cash, reduce costs, and set the business back on the path of profit – often to the delight of all stakeholders.”

It is during this phase that the turnaround specialist will produce a ‘three-way forecast’ consisting of cashflow, profit & loss and balance sheet. From this, the turnaround specialist can see the predictions unfolding and how the core business can be strengthened.

Returning a business to growth

The second phase of turnaround is the growth phase, and this still requires a real hands-on approach by the turnaround specialist. “You have to get into the real nitty-gritty of the business to find those parts which really work and do more of the same; but more importantly, stop doing those parts of the business which don’t work,” says Blayney. “This trial and error approach becomes the basis of ongoing restructuring while at the same time growing the business.”

During the transformation, every aspect of the business needs to be addressed.  This involves looking deeply into the operating procedures and systems across the whole of the business, such as looking at whether the marketing strategy and promotion initiatives are right for the business; and whether it has in place the right IT infrastructure and software to handle the growth. 

As Jeremy Blain, CEO and author of ‘The Inner CEO – unleashing leaders at all levels’ says, “Many businesses are crying out for a new business model to help them successfully transform and propel them into a prosperous and exciting future. With many organisations restructuring, especially around digital, it is even more important that executive leaders’ have a more collective approach to leadership and business health.”

Successful turnarounds require collaboration

After the impact of Covid-19 turnarounds are becoming an all-too-familiar part of business life, the key is to devise a structure that will keep the reviving business nimble enough to compete. 

Implementing a turnaround relies on the clients’ existing accountants working with the turnaround specialists to look after the long-term interests of their clients, and as the adviser being the sounding board for their clients while turnaround specialists perform their magic. 

It also requires the cooperation and support of all parties – the board, management team, staff, customers, suppliers, lenders, and the turnaround specialists working together. It must be a team effort, and there must be a commitment to follow through on the actions necessary from all parties if the turnaround is to be successful. But when that doesn’t happen, and the business can’t be saved, then the only option is formal insolvency – which will be the subject of our next article.

Categories
HR, Redundancy & Trade Unions

Tricky dilemma over staff?

In our Board Briefing published last autumn we covered the issue of making employees redundant if necessary when furlough came to an end.

https://www.linkedin.com/pulse/planning-redundancies-after-furlough-discontinued-tony-groom/

But since then, it has become clear that there are staff shortages in many areas and businesses cannot find the people they need going forward.

With Furlough due to end at the end of this month this is a tricky time for employers.

You may need the staff to get your business activity back to more “normal” levels but after more than a year of disruption and lockdowns your cash flow and balance sheet may be at a very low ebb and not able to support the overheads associated with retaining staff, never mind recruiting more people.

So what to do?

Clearly you need to retain the goodwill of existing employees, even if you are considering redundancies in the immediate term.

As our briefing points out, communication, keeping them informed and treating them fairly are all key to this.

Our briefing asks the board: “Are we thinking strategically enough about a future beyond the immediate crisis?”

Perhaps it is time to seek additional help from a turnaround adviser?

Categories
General

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 to a working from home (WFH) model.

This had implications both for business overheads as well as for the future of employment as many employees have indicated that they liked the WFH way of working and would like it to continue.

It has reportedly had no effect on productivity so businesses may be able to continue with employees working in this way with some additional investment in remote IT support and monitoring.  This investment could be offset by businesses no longer renting or leasing large city centre office complexes and thereby saving on overheads.

In manufacturing and business processes IT is also likely to yield benefits.  The introduction of robotics and AI in manufacturing is an obvious benefit after the initial investment.

Similarly automating and/or outsourcing some business processes will help to reduce overheads and improve profit margins.

Slow and steady is the key to getting back to full production

While businesses may be keen to get back to their pre-pandemic levels of activity it should not be done too quickly.

Although restoring the balance sheet is a key issue, there is always a danger of overtrading, by accepting more orders than the business can realistically fulfil. Failure to fulfil those orders can lead to problems with key suppliers the business may end up unable to pay and to reputational damage with both them and unsatisfied customers.

If there is a need for more capital to invest in the business it should be wary of both predatory lenders imposing onerous interest rates on loans and demanding directors’ guarantees. Similarly venture capital can come with problems for a business if the investor is too focused on short term returns on the investment and not willing to give the business time to grow sustainably.

Mergers and acquisitions may be a solution to business development but again should be looked at carefully before committing.

Ultimately, a business wanting to grow sustainably needs to know exactly where it is financially at all times and our free cash management tool can help you to do this.

https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/37139976-4f42-454f-aff5-75ae4be992c7

Categories
Cash Flow & Forecasting

Where are you heading?

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:

https://www.linkedin.com/pulse/heuristics-offer-alternative-way-dealing-uncertainty-tony-groom/

Above all, it is more than ever important to manage your cash flow to aid your decision making and there is a free tool for you to download that can help you:

https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/37139976-4f42-454f-aff5-75ae4be992c7

Categories
Accounting & Bookkeeping County Court, Legal & Litigation

The tip of the iceberg?

The High Court has closed down two businesses this month after it was found that they submitted false documents to at least 41 local authorities and the government’s bounce back loan (BBL) scheme to secure £230,000 worth of emergency support.

LV Distributions and SIO Traders were investigated by the Insolvency Service, which proved that neither company had ever actually traded.

One of the two had been claiming to supply personal protective equipment while the other had claimed to sell medical care products.

The Government has warned that it will be cracking down on Covid fraud and in June the Public Accounts Committee of MPs, for the department for business, energy and industrial strategy (BEIS), that suspected Covid-related fraud amounted to £27bn.

It has been argued that some of this loss could be attributed to a failure to carry out basic checks and controls in the rush to get funding out to struggling businesses.

The message is clear.

Businesses need to make sure their paperwork is complete, clear and verifiable to avoid accusations of fraud and to keep a close eye on their cash flow if they are struggling to repay Covid-related loans.

We have a free tool you can download to help you https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/0a02193a-12a8-432b-8b19-81bc4f8a8b74 and we’re always available by phone if you need further help.

Categories
HR, Redundancy & Trade Unions

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 30 September.

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 reputation as an employer.

Our briefing on planning redundancies will help you get it right:

https://www.linkedin.com/pulse/planning-redundancies-after-furlough-discontinued-tony-groom/

Categories
County Court, Legal & Litigation Debt Collection & Credit Management Personal Guarantees

Directors with personal guarantees take note

Bailiffs (High Court Enforcement Officers) were given permission by the High Court earlier this year to use remote access technology, such as Zoom, to seize personal assets from debtors.

As with personal visits by bailiffs to people’s private homes, virtual access will require the consent of the debtor.

The idea is that the parties involved will set up a Zoom, a WhatsApp or a Facetime call where the debtor shows the Bailiff around their property allowing the latter to list property to be made the subject of a controlled goods agreement.

The debtor may not then sell or dispose of the goods included and under the arrangement they may remain in the home while they carry out a repayment plan.

The judgement was made in January 2021, when Covid lockdowns precluded bailiffs from entering private homes. It was in part seen as a way of carrying out enforcement action while protecting bailiffs from the risk of catching Covid.

It is also seen as helpful to debtors in that they will continue to have the use of their property during a lengthy repayment plan.

Among the goods that cannot be seized are: 

  • Vehicles or computer equipment needed for work 
  • Things that belong to other people who are not named on the debt.
  • Things needed to cook food e.g., cooker or microwave.
  • Fridges
  • Mobile phones
  • Tables and chairs for the family

For those bailiffs dealing with a company, they are likely to continue to visit the premises since it is easier to gain entry as most business premises are open to the public or at least don’t lock their doors to visitors. Once inside they can go anywhere to ‘seize’ goods so long as they are not forcing entry through locked doors.

Categories
General

Why take time out for a walk in nature?

No matter how busy I am I try to take a walk in the countryside at regular intervals.

Why? Because it is refreshing, invigorating and most importantly good for my mental health.

It is something for stressed business leaders to try to build into their undoubtedly busy lives. 

The temptation to focus exclusively on the problems in a business to the exclusion of all else may be great but good leadership and making the right decisions depends on a leader having good mental health.

But actually, taking time out away from the office and allowing the mind to roam free during a walk could well result in new solutions emerging to the problems besetting you.

As the recent decision by US gymnast Simone Biles to pull out of the Olympics finals recently demonstrated she said she felt she could not perform at her best because of issues with her mental health.

It’s a lesson stressed business leaders could learn. 

Categories
Banks, Lenders & Investors General Insolvency

Director scrutiny over covid loans

Closing an insolvent business is a horrible experience but disqualification from being a director is even worse.

In a recent case in the North of England the director of a retail business was disqualified for 11 years after it was concluded that he had overstated his turnover when claiming a Covid Bounce Back loan.

The regulations state that eligibility for a loan was in doubt given that they should be for less than 25% of the previous year’s turnover.

It appeared that the business had already ceased trading the previous year but insolvency officials said he should have known that turnover had been insufficient to qualify for the loan, which was paid out in May 2020.

It also found that he had failed to provide sufficient records to establish what the funds were used for.

This situation emphasises the duties on directors to not only keep accurate and detailed financial records but also to ensure they comply with all their duties when applying for a Covid-related BBLS or CBILS loan or when a business is insolvent.

Any investigation of formal insolvencies will look closely at loan applications and the use of funds.

Disclosure and directors’ reports should cover the circumstances of any loan.

Our Board Briefing on inoculating your board during coronavirus is helpful for directors in understanding their legal duties.

You can view it here: https://www.linkedin.com/pulse/directors-need-understand-duties-liabilities-whatever-tony-groom/

It is distressing enough to have to deal with closing down a business into which you have put your time and energy – much worse is to be disqualified for regulatory failures and be prevented from starting afresh.

Categories
General

Leadership is about knowing when to ask for help

Businesses have faced a perfect storm of troubles during the Covid pandemic, leaving many of them perilously close to insolvency.

Now as the various support schemes come to an end they are also facing having to start paying back Covid loans and deferred VAT at the same time as trying to get their business activity back to full production in the face of supply chain shortages and potential recruitment difficulties.

It’s a tough and painful situation but it can be compounded if the leader(s) of the business try to struggle on, or live on hope, rather than acknowledging that it’s time to call in help.

Leadership is often assumed to be about knowing what to do in all circumstances.

But it is unrealistic to assume that any one person has all the answers, especially when faced with a situation unlike anything that has gone before. Whether it is from pride or fear, the outcome from soldiering on is not likely to be good.

Effective leadership is about knowing your limits and when to call in help from the experts.

So don’t despair. We have a number of free tools for download that can help businesses to get a grip on their situation.

They include our Cash Management tool: https://www.linkedin.com/smart-links/AQF0zn8hTCKbSw

And our Guide to dealing with CCJs: https://www.linkedin.com/smart-links/AQECtjYmuU4aNA?lipi=urn%3Ali%3Apage%3Ad_flagship3_company_admin%3BT8pIrBPJRZacMnpp5QR9cA%3D%3D

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

Categories
County Court, Legal & Litigation

County Court Judgments and how to deal with them

CCJs are generally awarded against a company as the result of the business failing to pay a bill. This is either a consequence of not being unable to pay bills due to a lack of cash, or a failure to effectively respond to a claim. 

Whatever the reason, incurring a CCJ gives rise to significant business risks which need to be addressed.

CCJs give rights to claimants that allow for an escalation of enforcement that can significantly increase pressure on a company. 

These rights include the right to appoint enforcement officers to seize goods and the right to issue a winding-up petition to close the company.

CCJs are public judgments which are closely monitored by banks, credit reference agencies, lenders and suppliers. They will therefore not only have an adverse impact on the company’s credit rating and ability to obtain credit from suppliers but are also likely to trigger a review of the account by the company’s bank or secured lenders.

Read our new Board Briefing on CCJs here:

https://www.linkedin.com/smart-links/AQECtjYmuU4aNA?lipi=urn%3Ali%3Apage%3Ad_flagship3_company_admin%3BT8pIrBPJRZacMnpp5QR9cA%3D%3D
Categories
Accounting & Bookkeeping HM Revenue & Customs, VAT & PAYE

Will HMRC comply with the Business Secretary’s advice regarding VAT deferral repayments?

The Covid pandemic and the restrictions that have had to be imposed to try to contain it have been difficult for businesses.

It is still by no means certain, given the rise in case numbers due to the latest Delta variant, whether further restrictions or lockdowns will have to be imposed.

The UK Business Secretary Kwasi Kwarteng said recently “the “path back to full trading will be difficult for many companies, particularly those with accrued debt and low cash reserves”.

However, as the various relief schemes come to an end businesses will have to find the money to pay back their debts and liabilities even as they struggle to get back to full activity.

Currently the most pressing is the deadline for paying back deferred VAT and PAYE.

Last year businesses were allowed to defer VAT payments due between 20 March 2020 and 30 June 2020 until March 31, 2021 without incurring charges or penalties.

They could also join a special repayment scheme to spread payments as long as they did so by June 21, 2021.

They may be charged a 5% penalty or interest if they do not pay in full or make an arrangement to pay by 30 June 2021.

Recently, Kwarteng wrote to business groups, including the Institute of Directors and restructuring body R3, to assure them that HMRC “would soon update its enforcement methods, so that outstanding debts could be brought into managed arrangements for Covid-torn companies.” 

He promised that the use of insolvency procedures would be a last resort.

Although he has reassured businesses struggling to repay debt and recover from Covid pandemic restrictions that HMRC will take a “cautious” approach to recovering money owed to the Government, there may be a sting in the tail.

He said that HMRC would take a flexible approach “to those businesses that engage with it” and added “a return to normal insolvency processes will be vital for a healthy economy”. 

The Government estimates that more than half a million businesses deferred VAT payments last year, for which repayment has been due since March 2021.

There is no doubt that the numbers of insolvencies have been relatively low throughout the pandemic.

The most recent quarterly Begbies Traynor red flag alert published in April 2021 revealed, however, 723,000 businesses were in ‘significant financial distress1’, a 15% increase from Q4 2020 and a 42% year-on-year increase.

They also reported that insolvencies were currently “artificially suppressed … partly due to a ban on winding up petitions with regard to Coronavirus related debts.”

Nevertheless, according to R3, corporate insolvencies increased by 8.8% to 1,011 in May 2021 compared to April’s figure of 929 and increased by 6.9% compared to May 2020’s figure of 946.

The main driver, it reports, has been CVLs (Creditors’ Voluntary Liquidations) although “it’s too early to say whether the mild increase in corporate insolvency numbers is the start of something bigger”.

The question is whether HMRC will adhere to the Business Secretary’s promise or compound businesses’ recovery difficulties.

The Finance Bill 2020 gave preference to certain debts (VAT and PAYE) due to HMRC in the event of insolvency. This means that money owed for these two taxes must be paid to HMRC while other creditors, including suppliers and unsecured creditors holding directors personal guarantees, take second place.

HMRC has a reputation for being highly demanding when trying to recoup liabilities such as VAT payments.

This is more likely to be the case where businesses have ignored their communication and a failure to respond can often lead to greater problems.

So will HMRC adhere to the Business Secretary’s promise to “take “a cautious approach to enforcement of debt owed to government that will have accrued” during the pandemic”?

There is a precedent in that HMRC introduced the a TTP (Time to Pay) scheme in the wake of the 2008 financial crisis.

Clearly, it can be flexible in times of significant financial pressure.

However, the crucial point is that HMRC does not take kindly to being ignored.

Nor is it likely to be impressed if a debt-laden business pays unsecured creditors first. In this case the directors could be in the position of being held personally liable for the preferential payments. 

It is therefore essential that businesses continue to monitor their cash flow and we have a free tool to help you: https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/0a02193a-12a8-432b-8b19-81bc4f8a8b74

Categories
Accounting & Bookkeeping

We are now on our way to ‘paperless’!

We may be a bit late to going paperless but our latest purchase has made us fervent converts.

We recently bought a BROTHER – MFC-L8690CDW All-in-One Wireless Laser Colour Printer for £324 plus VAT from Currys PC World. The key feature for us is its programmable short cut buttons on the touchscreen keypad for scanning documents.

We now scan inbound post to folders which are often remote. For instance K2 accounts mail to a ‘K2 Mail Accounts’ folder on the K2 server which is shared with our remote bookkeeper. We no longer deliver it by hand.

It also allows us to scan mail received here at our registered office directly into shared folders for each company and saves us the previous faff of scanning documents, converting them to PDFs and forwarding them by email as attachments.

Using it has also revolutionised our document storage as we no longer need to hold hard copies of most documents.

It also taught us a lesson – that old practices from the past may no longer be the most efficient and productive as a business grows.

Is it time you had a look at your business processes to save yourself time and improve efficiency?

Categories
Banks, Lenders & Investors Cash Flow & Forecasting

The 12 month loan repayment holiday has ended

The 12 month loan repayment holiday has ended. Small businesses are due to start repaying Covid support loans following the end of the loan repayment holiday.

Bounce back loans were first launched last May, and banks extended £46.5bn to 1.5m SMEs but reports say that already a fifth of SMEs have asked for more time to pay.

One accountancy firm, Mazuma Accountants, says a survey they carried out at the end of May revealed that as many as 39% of small businesses believe they would struggle to meet repayments.

According to the FSB (Federation of Small Businesses) many are unaware of banks’ pay as you grow schemes, which could help with managing the repayments but warns they should ensure they are clear about the impact schemes could have on their future credit needs.

The business environment is likely to remain tricky for many for some time to come and it will take time to ramp up to full activity, especially in the face of uncertainty about lockdown easing, materials shortages, in construction in particular, and also the difficulties some are having filling vacancies.

In the meantime we would always advise that you focus closely on your cash management and we have a free tool to help you. Download it here:

https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw
Categories
General

Pressure on construction businesses as materials are in short supply

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 we at K2 would urge SME builders to take advantage of our offer to download its free cash management tool to protect themselves against the ebbs and flows of income. 

Available here: https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/0a02193a-12a8-432b-8b19-81bc4f8a8b74

Categories
Insolvency

Insolvencies. Now is not the time to relax

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 over-trading in their desire to quickly get back to as near normal activity as possible.

We have a helpful, new, free cash management tool for download. Click the image below to visit the download page.

Categories
Cash Flow & Forecasting Debt Collection & Credit Management

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

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 guide on LinkedIn https://www.linkedin.com/smart-links/AQGnS8URPakZcw

And K2 will soon be launching its free cash management tool https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw

Categories
Banks, Lenders & Investors Cash Flow & Forecasting

Cash flow and Bank management

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.

K2 Partners has 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.

Our 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.

K2 will soon be offering a free Cash Management tool for businesses to download and use.

In the meantime, businesses should also concentrate on maintaining a good relationship with their bank and there is some guidance here https://www.linkedin.com/smart-links/AQF0zn8hTCKbSw to help you.

Categories
Banks, Lenders & Investors

Businsses should consider the RLS implications carefully

Can your business cope with another loan?

The latest Government initiative to help businesses to get back on their feet following the pandemic lock-downs came into effect on April 6, 2021.

The Recovery Loan Scheme (RLS) announced in the March budget is only available until December 31, 2021 and so far, just 18 lenders have signed up to participate.

They can be found here on the British Business Bank website.

Be aware that ultimately the lenders will decide whether to approve your application and not every accredited lender can provide every type of finance available under RLS.

There are some protections for borrowers in that lenders will not be allowed to take any form of personal guarantee for facilities of £250,000 or less. Above that amount lenders cannot include Principal Private Residences in the guarantee agreements and that the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied.

Loans will include 80% government guarantee and interest rate cap and can be used in addition to previous loan schemes such as BBLS and CBILS.

What are the types of RLS?

  • term loans or overdrafts of between £25,001 and £10 million per business
  • invoice or asset finance of between £1,000 and £10 million per business

What is the maximum loan period?

  • up to 3 years for overdrafts and invoice finance facilities
  • up to 6 years for loans and asset finance facilities

Who is eligible?

You can apply for a RLS if your business is trading in the UK, would be viable if it were not for the pandemic and has been adversely affected by it. You cannot apply if your business is in collective insolvency proceedings.

What to consider if you are thinking about applying for a RLS

Essentially, it comes down to whether a loan would be affordable or not given the relatively short repayment terms.

Do you regularly monitor your cash flow and once your business is able to trade normally the state of your order book and overheads? What is the value of any fixed assets your business has?

Have you already taken advantage of any of the other pandemic emergency loan schemes? Will you be able to manage the repayments on top of all your other business overheads?

If your bank is one that has signed up to the scheme then it may make sense to approach them first as you already have a, hopefully good, relationship with them.

K2 Business Partners has published a number of guides to managing your relationship with your bank and these are available here

There is also a Board Briefing on the topic of your relationship with your bank here

If you are uncertain about whether to take advantage of a loan under the RLS perhaps it will help to talk it over with an experienced restructure and recovery advisor first.

Tony Groom of K2 Partners has more than 20 years’ experience in advising businesses and you can get in touch with him via a message on LinkedIn, or by calling 020 7720 8000 or emailing: info@k2-partners.com.

Categories
HM Revenue & Customs, VAT & PAYE

Furlough fraud and directors’ liabilities

The spotlight is turning to company directors as HMRC continues to crack down on fraudulent claims for furloughing staff.

The latest figures show that over 11 million workers have been furloughed in the UK and 41% of employers had staff furloughed. As of January 2021, HMRC had received over 21,000 reports of potential furlough fraud.

The March 2021 budget included an investment of £100 million for the creation of a taskforce to tackle fraud within the furlough scheme.

Among the HMRC powers are the ability to charge individual directors found to have played a role in fraudulent claims under the Criminal Finances Act 2017.

HMRC Attention is particularly focused on claims by insolvent companies or companies where there is a “serious possibility” of insolvency. Directors may face claims for breach of their statutory duties and disqualification under the Company Directors Disqualification Act 1986.

Download our Board Briefing, Inoculate your board against Coronavirus here and if you need help call 020 7720 8000 or email: info@k2-partners.com.

Categories
General

Is a lack of people with suitable digital skills affecting your business future?

Fewer than half of British employers believe young people are leaving full-time education with sufficient advanced digital skills, and 76% of firms think a lack of digital skills will hit their profitability.

The Learning & Work Institute also calculated that the number of young people taking IT at GCSE has gone down by 40% since 2015.

It has been predicted that the future of successful business post pandemic will be in the increasing adoption of robotics, AI and remote digital solutions such as cloud storage and video conferencing.

But is it fair for employers to employers to place responsibility on the education sector? In a fast-changing landscape, how do schools and colleges judge exactly what practical digital knowledge will be needed, especially in such a diverse sector?

There is also an argument that at least some of those skills are best learned “on the job” rather than in an exclusively academic environment.

Should employers become more hands on in working with schools and in using all the various schemes such as apprenticeships and Kick Start to play a more active role in ensuring their employees, present and future can gain the digital skills needed for the future?

Categories
Banks, Lenders & Investors Cash Flow & Forecasting

Does your business really have enough cash?

Nursing your business through the pandemic lockdowns successfully is one thing, but there is a danger in ramping up activity too quickly as the situation eases.

Accountants call it over-trading.

This is when a business runs up a big rush of sales on credit without the cash to pay its suppliers and can rapidly become insolvent.

It is easy to be misled by the figures on the balance sheet, which may paint an over-optimistic picture of the cash flow forecast, especially when some of this is predicated on fixed assets and on the prospect of new investment from lenders or investors.

Instead, the business should focus on cash management, which gives a much more realistic picture of assets and liabilities.

K2 will soon be offering a free Cash Management tool for businesses to download and use.

Categories
Rescue, Restructuring & Recovery

Leaner, fitter and facing the future with confidence?

As lockdown restrictions are gradually eased businesses will be preparing to increase their activity.

But how many of them will emerge as very different organisations from the ones they were at the start of the pandemic?

Some have already changed their offering or target markets to meet the changed conditions, like the marquee rental company that pivoted to offering equipment to clients needing extra space for temporary canteens, classrooms or even warehouses.

The pandemic has forced many businesses to look more closely at their offerings, their processes and the way they work for the longer term.

These already include including switching to using remote working and intending to continue wherever possible, thereby reducing both their office space and their overheads. Manufacturers are likely to automate production lines and introduce AI and robotics.

There will be more investment in internet-based technology, remote staff surveillance to cloud storage and enhanced security systems.

Economists argue that all these changes could lead to a significant rise in productivity after years of being sluggish.

There will also be more investment in R and D and in training and re-skilling staff to be competent in managing new processes.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting

Ignore it and it will all go away?

It is very tempting in the current “abnormal” circumstances to ignore the warning signs that a business may be heading into difficulties.

But there is no telling for how much longer the current pandemic restrictions will continue and much of the support offered to businesses has been in the form of loans, or extensions to payment deadlines, that will have to be paid back.

Ignoring it all in our experience does not make situations go away, merely postpones the inevitable reckoning or actually makes the situation worse.

Directors need to continue with their monthly management accounts reviews, their checks on their balance sheets and their revenue generation despite the current circumstances.

They also need to understand their duties and liabilities.

Things may be grim, but there is still help out there.

K2 Partners has a number of guides to help businesses available in the Knowledge Bank of the Online Turnaround Guru website. They cover everything from dealing with debt collection to maintaining good communication with the bank, the essentials of directors’ duties and managing stress and anxiety.

There are also several helpful Board Briefings in the Resources section of the K2 Partners website.

Crucially, there is no need to behave like an ostrich and bury your heads. We are available if you need help and support or just someone to talk to. 

Categories
Banks, Lenders & Investors

Keep talking to your bank manager

At some point lockdown restrictions will be eased and businesses will be able to trade normally again.

Many will need the help and support of their banks to recover and grow.

Boards therefore need to ensure that they fully understand how their lenders view the company and actively manage their banking relationship to maximise bank support over this period. 

So, even if business activity is at a low ebb at the moment, it is important to maintain communication with the bank manager and to continue to nurture the relationship.

Remember, banks see their role as secured lenders who never expect to write off loans. They are not entrepreneurs, they do not have an equity upside, so risk management of their portfolio of customers is key.

Take a look at our Board Briefings on banking issues and our Partner Mark Blaney’s book on Amazon. Take a look and get in touch if we can help.

Categories
Uncategorized

Tony Groom hosts a TMA Webinar in Partnership with London Business School

COVID-21: Present and Future of Corporate Turnarounds

2020 was a gruesome year and many of us impatiently waited for its end. However, what will Covid-19 bring this year? Will 2021 be a year of renewal and opportunity or should we brace for impact? On 2nd September TMA UK and the London Business School Turnaround & Restructuring Club joined together to host a discussion on what businesses will look like very soon and in the long-term.

K2 Partners Tony Groom moderated the discussion between a panel of experts who took a look at distress from a number of perspectives and discussed which entrepreneurial and career opportunities are open for people interested in working in the distressed sphere.

If you would like to watch the recording you can do so here.

Panel Moderator

Tony Groom, Chief Executive, K2 Business Partners

Speakers

Karthik Dasari, Founder, Tern Capital

Ivelina Delcheva, Chief Operating Officer, AUTO1 FinTech

Rada Dimitrova, Director, Restructuring and Special Situations Group, KPMG

Categories
Business Development & Marketing

Have you been tempted to cut your marketing budget during lockdowns?

Without marketing there are no leads and without leads there are no sales. It is extraordinary how often marketing budgets are cut when sales are drying up.

Do you have a joined-up marketing process? For something to happen, what needs to be done beforehand? How are enquiries generated? How are they followed up? 

Who does what? Do you have the right people? Do they have the relevant experience? Have they been trained? 

Are your marketing campaigns and initiatives proactive or reactive? 

Do you carry out market research? Do you monitor your competitors? 

While business may be at a low ebb due to the current efforts to control the spread of Coronavirus and roll out vaccines there are signs that cases of infections are beginning to reduce.

Businesses need to start preparing now for a new “normal”.

This article is an extract from our Board Briefing on sales and marketing for survival. 

You can download the sales and marketing board briefing here:

https://www.k2-partners.com/bb-sales-and-marketing-for-survival/

Categories
Business Development & Marketing Rescue, Restructuring & Recovery

Stronger together?

It is possible that merging with or acquiring a rival business may be the key to survival in the future.

A key issue a board needs to face in the current circumstances is to develop an M&A strategy for the business to address as appropriate both: 

  • Ensuring survival requirements, and 
  • Taking advantage of growth opportunities. 

The initial questions that need to be considered are:

  • What is our objective of the proposed merger / acquisition activity?
  • How are we going to identify appropriate targets and terms to meet these objectives? 
  • How are we going to manage the process?

You can find out more in our latest Board Briefing 👇🏻

Categories
County Court, Legal & Litigation Debt Collection & Credit Management

Bailiffs during Covid -19. You can’t make it up!

A 3rd generation run client operating from the retail and wholesale premises for almost 80 years and sells fresh goods to hotels and restaurants, was visited by bailiffs recently. 

It lost about 75% of its turnover in March last year when its wholesale customers closed due to lockdown. Since then, it has struggled on with its much smaller retail business.

Astonishingly, a high court enforcement officer on behalf of the local council attended the premises recently to recover an old and disputed business rates liability. No cameras were in tow although this particulate private contractor likes its status as defenders of claimants as victims.

The Enforcement Officer was adamant that they had the right to remove plant & equipment without regard for the 50+ company employees, nor for circumstances caused by Covid-10.

Intervention by the local MP was magnificent as she contacted the leader of the Council. However the Enforcement Officer was only persuaded to leave after seizing control of plant & equipment under a control agreement.

While our client survives to deal with their dispute over the claim, the whole episode had the attributes of a heist by gangsters, it was quite extraordinary.

Categories
General

How will you change your business post-lockdown?

Business life has without a doubt been unremittingly more difficult during the Coronavirus pandemic, not least due to the restrictions imposed by several lockdowns.


However, arguably, this has also been a learning experience for many with lessons that may be useful when things eventually return to “normal”.


Take this example from a survey by Deloitte which has found that one in four British employees could end up working from home. long-term.


It found that 97% of CFOs predict this outcome as companies make changes introduced during the pandemic permanent.


“By and large, this massive, forced experiment in home-working has been very successful. Sectors have been able to maintain quite a high degree of effectiveness operating from home,” said Ian Stewart, chief economist at Deloitte. 


However, this does not spell the end of the office, Mr Stewart continued, stating that people overwhelmingly want a combination of home and office work so they can continue to work with others. 

Categories
Banks, Lenders & Investors

Boards need investors who are willing to be patient and invest for the longer term

There are lessons for all businesses in this week’s collapse of Arcadia, albeit High Street Retail has had its own specific problems for many years in the shift in consumer habits to online retail spending.


All businesses need to be agile, aware of changes to their systems and processes not least from the growth in AI and technology.

They need boards with a wide range of expertise but equally importantly, they need investors who are willing to be patient and invest for the longer term.

What they do not need are owners/investors whose sole focus is to extract maximum profit as quickly as possible while taking little or no interest in the business’ development.

If you want investors who are willing to be engaged, to contribute both money and expertise for the longer term, why not contact K2.

Categories
Uncategorized

Tony Groom chairs the 2020 TRI conference

Today, our Partner Tony Groom Chaired the 2020 TRI conference.

In a central London studio, he hosted the live TV event, interviewing turnaround and restructuring professionals and moderating discussion panels throughout the day.

In a year where the industry has seen some of the most significant legislative and regulatory changes for decades, discussions throughout the day encompassed effects of the Corporate Insolvency and Governance Act, HMRC’s preferential creditor status in insolvencies, and the new mandatory requirement for independent scrutiny of pre-pack sales, where connected parties are involved.

Categories
Banks, Lenders & Investors Rescue, Restructuring & Recovery

Welcome relief for manufacturers uncertain about investing in new plant and machinery

A welcome relief for manufacturers uncertain about investing in new plant and machinery.

The Chancellor has confirmed the temporary £1m tax relief (up from £200k) on investments in plant and machinery has been extended by a year to January 2022. 

Recent announcements about restrictions continuing at the same time as those about vaccines give us hope but make it difficult to plan. While the timeline for resuming normality is unclear, what is clear is that business will continue. For this reason plans need to be made; the only question is when they should be implemented.

Such plans might include financial restructuring but should look to the future. No business can stand still, despite the current uncertainty. 

Is it better to take a chance on less than 100% certainty of an outcome than to wait for certainty? Traditional research and scenario modelling is useful heuristics can help. Our Board Briefing “Decision-Making in Times of Market and Economic Uncertainty” on the topic might be useful.

Categories
Business Development & Marketing Cash Flow & Forecasting General Rescue, Restructuring & Recovery

Will proposed relaxation of planning laws revitalise construction?

Last month the Government announced that it would enact legislation to relax planning laws so that full planning applications will not be required to demolish and rebuild unused buildings making it easy to convert commercial and retail properties into residential property. This could be the key to a swift revival of high streets and town centres by repurposing existing property.

If approved these new rules should come into effect in September.

The Government is also proposing to reform England’s planning system, it claims, “to deliver more high-quality, well-designed homes, and beautiful and greener communities for people to live in.” although the details have not yet been made public.

On the face of it, if the rule changes do become law this will be a significant boost to construction and building companies and suppliers, like us, of building materials.

Presumably, also, developers could benefit from a relaxation of the planning conditions that often accompany such projects, whereby local authorities can make planning consent conditional on the provision of a proportion of affordable housing or other community amenities via a Section 106 Agreement.

In answer to concerns raised by such bodies as the Council for the Protection of Rural England (CPRE) and the Local Government Association (LGA) that it will lead to a decline in standards, the Government has said that the measures are designed to cut out bureaucracy “to get Britain building” but will also protect high standards: “Developers will still need to adhere to building regulations.”

It has also pledged that pubs, libraries, village shops and other buildings essential to communities will not be covered by these new flexibilities. This will help avoid the decline of village and community life by preserving local amenities although most local libraries and many pubs have already closed.

Although a controversial initiative, we believe this would be a welcome boost for construction and associated industries and for employment through the jobs it will create. What do you think?

Has your business struggled as a result of the Coronavirus Pandemic? Are you having to consider redundancies as the Furlough measures are scaled down?  

Categories
Uncategorized

The 4-Part Single Sentence "Elevator Pitch" That Actually Works

Some are cheesy. Some are crass. Some are crazy.
But very few are compelling and convincing.

Until now…! elevator

You know the type of scenario.
You have only seconds to make that important impression.
And because they invariably ask you in that seemingly polite but disengaged way – because there are so many other people they do it with and vice-versa – you quickly feel uncomfortable because of the way they ask you and their matching facial expression.
Suddenly, before you’ve replied, your subconscious mind is telling you that what you’re about to say about you and your job is functional at best and most probably rather boring.
And their subsequent lack of any follow-up questions confirms their seeming indifference and your self-imposed insecurity.
Damned by your own description!
This self-imposed pressure is understandable, especially when you consider that when someone asks you what you do you have just seconds to grab their attention and, ideally, also their admiration…especially as they hear so many colourless answers to this often cold question.
So, if this situation haunts you and is even hurting your personal and professional brand every time you’re asked, then try this 4-step formula for describing what you do in just ONE sentence:
“At the heart of what I do is to help A who struggle with B to achieve C.”
 
The 4-part formula comprises:

  1. At the heart of…” gives your elevator pitch a more engaging sense of emotion so it has feeling rather than just being functional and factual.
  2. A is your ideal client.
  3. B is their biggest issue.
  4. C is their desired outcome or achievement)

So, for me, this would be something like:
At the heart of what I do is to help young business professionals who struggle with their true confidence skills to communicate compellingly to achieve greater pay increases, promotions and business sales.
But…it’s not just what you say. It’s the way you say it that’s also important.
Practise delivering this sentence into a mirror so you not only know how to adopt the right tone and cadence in your verbal delivery, but also how to adopt the right facial expression and vibe in your non-verbal delivery.
Why?
Because if you say something that sounds good but, facially, you look like you’re confessing to shoplifting, then it undermines your elevator pitch completely.
So, when you do utter your compellingly concise sentence, be positive, be punchy and then be profitable!
I’d love to hear your thoughts and feelings about this topic, as well as any results you get from applying this technique. Please look me up on Facebook, Twitter or LinkedIn. Thanks and enjoy!
You can also post comments on this page and join in the discussion!
Guest blogger: Sean Brickell find out more at https://life-impact.biz/

Categories
Banks, Lenders & Investors Finance General

Has what little trust we have in the banks been further eroded?

 
A guest post from Clive Pacey, Commercial finance broker CPCM Finance
This story is somewhat disturbing but would easily be dismissed if we felt that we could trust the banks and their cohorts in various professional services. Unfortunately I believe that that trust has broken down
The accusation is that Allder King worked with Lloyds Bank to “undervalue” various properties held by  certain borrowers who had particularly good low cost pre 2008 deals. The effect of this was to breach the loan covenant and effectively send the business to the wall. True or not? Well Allder King have been cleared by their institute and Lloyds have stated the claims are “baseless” to which one might say,  they would do that and they would say that, wouldn’t they?
I actually believe that this is probably quite a straightforward case to judge and I suspect the detail will be outed soon enough. Undervaluing properties is surely not difficult to pinpoint.
I would also like to believe that this accusation is unfounded and the industry can breath easy. In fact I  wish I could make that assumption and certainly it is no reflection of Lloyds in isolation that I cannot. But the fact is that I feel uneasy
The relationships between many lenders and “professionals” is very unhealthy. There is an often an attitude that businesses are cash cows to rip fees out of regardless of the consequences. There is also too frequently an underlying contempt for businesses and their issues and this is somewhat ironic coming from a sector which is, to put it politely is not held in great esteem
Many business owners are rightly suspicious of the “men in suits” that appear to be  just a little too friendly with each other and give the impression of being “a mafia”, as one client of mine put it. Their concerns are not always unfounded with reciprocal passing around of sometimes unnecessary work not unheard of. During my time, drinks have loosened tongues at various events and I have certainly not been impressed by some of what we I have heard
My view on this is clear. I believe that if bankers have experience of the real world and an understanding of what it takes to commit to an enterprise, then there may just be a little more respect. Certainly if the Allder king story does stand up, then contempt rather than respect is the word that springs to mind. Often though this is pure laziness with both the “professionals” and bankers too often working in a bubble
Perhaps unusually in the finance brokering world, I am not from a banking background but do have extensive experience on the “other side of the fence” in sectors such as music, advertising and manufacturing. I believe I have empathy and certainly respect for those that struggle and commit to build a business from scratch. Certainly more respect than I could hold for those bailed out after making catastrophic mistakes which were borderline criminality
Which perhaps brings me back to the above case. I cannot call the judgement and the finer points of the law in this case are not my specialist area but the very fact that these alleged cynical practices do not come as a surprise, is the biggest issue of all
http://cpcmcredit.wordpress.com/
http://www.cpcmcredit.co.uk