Please visit https://www.companyrescue.co.uk/ for confidential help and insolvency advice or email keiths@ksagroup.co.uk

Monday, 30 June 2008

Oil price - more pain still

One of my friends runs a civil engineering company and quite successful it has been in recent years too. He has made a good living out of it despite the vagaries of dealing with large quoted customers in the water sector.

He sent me an email last week saying that the last 6 months have seen a rise in their diesel costs of £146,000 in 6 months. Over the next 6 months if prices stay the same as they are now (at $142 barrel) then they could see a further cost increase of £200,000.

This guy runs a tight ship with monthly budgets carefully worked out in advance, these are being "blown out of the water". In fact the company could end up with a loss and that will affect his bank covenants. So he is talking to the customers about raising prices to compensate and without that the business could go from being profitable and doing well to distress in 12 months.

The real world impact of soaring oil prices, will be felt by this company and may lead to job losses, bank pressure and firefighting

Keith

Sunday, 29 June 2008

Software company with cashflow crisis?

We see many software companies! Some are hopeless dreamers, others are more pragmatic and have a product that works (thats good!) and also have a market.

Last week I met 2 software companies and we had enquiries from 2 more that were not viable.

One of the companies I met with on Friday 27th June in the M4 corridor has, I think, potential to be a medium sized and profitable company, but its has simply run out of cash before the software has enough customers.

With sales of £1.4m it has proven there is a market and despite building a sound plan, no investors could be found in time. Great shame, they also had worries about their directors overdrawn current account which means they owed £150,000 to the company!

Looking for advice on that they visited this page on our website in stepped CompanyRescue!!

http://www.companyrescue.co.uk/company-rescue/guides/overdrawn-current-accounts


When we meet people they ask lots of questions, How can you help us? What do we do about the bank? Will the VAT man close us down?

One of the first questions these guys asked was: WHY US! In other words why have you met with us when you get so many opportunities to help other companies!

Here is my answer: We select companies from our enquiry list that fit these criteria:


  1. Is there a marketplace for the product, is that market growing, steady, long term or short term, declining or dead?
  2. Does the company have a niche within that market place or more fundamentally - is there a business?
  3. Management and systems - are the systems and management in place or can we supplement or even replace them?
  4. Is there strong WILL and determination to sort the problems and get the company back to profits?
  5. Can we understand the business (we are but simple folk of course!) and can we work with the team or supplement it with our people?

Clearly the last is one that can only be judged after an initial meeting. That's why, if we think we can help, if the first 4 checks are in place and we have been given accounting information, we offer a FREE INITIAL MEETING.

This meeting is frank, robust and we pull no punches. Can it work? What changes are required for turnaround? Do we think the management is up to the task? These are all questions that we ask.

If we think a turnaround is viable; we suggest the solutions, the sub solutions and then discuss them fully. After that meeting we report back in writing to the board with a strategy plan. It's a process that has worked for us over the years and the benefits for the client company are:

  • Professional advice from leading turnaround experts - without charge and worry about fees.
  • Scenario planning opens peoples eyes to the options and solutions available.
  • Removes fear and worry, "a man in the pub told me I will lose my house and can never run another company" and all that rubbish is quickly dispelled.
  • Gets the creative juices flowing AND lifts morale and confidence - "so you mean we can save this thing" is a common response!

Let me know if any of you or your clients want this service: call 0800 9700539 for more details.

Keith

Thursday, 26 June 2008

An example of an enquiry for assistance and our response

Sent: 25 June 2008 12:29To: Keith Steven
Subject: Contact Us Message

I wonder if you are able to assist. I am looking to purchase a loss making company (£1.3m historial debts) and in order to achieve the turnaround strategy, I *think* I will need to liquidate the company. In essence I need to relieve the business of some difficult contracts, such as: - (possibly) some staff - premises lease - contract car lease(s) The remainder of the assets, liabilities etc I will want to take with us to a new company. Perhaps liquidating the business is a bit drastic? Perhaps you can help? I am looking for some advice as to whether this is a legal and appropriate approach and to work with someone through the liquidation process (if appropriate). David

Keith's response:

Yes all legal, eminently sensible and there are at least three ways to do this. It just depends on your objectives, the vendor's objectives, any secured lenders requirements and the best tool for the job can be found below.

1. One way requires little or no cash to buy the business, then freeze debts, leverage tax and VAT for 6-10 weeks and then enter the company into CVA this means that some of the future profits are used to pay off creditors. There is no noise of administration or liquidation and you can leverage creditors monies without risking your own. See guides here. http://www.companyrescue.co.uk/company-rescue/options/detailed-cva

2. The second is Administration pre-packaged sale. Here the company is put into admin having lined up an agreed purchaser (you). See guide here: http://www.companyrescue.co.uk/company-rescue/options/administration and click guide to pre-pack flowchart

3. The third is acquire the company then liquidate it having hived down the assets to a new clean subsidiary. See this page for brief guide http://www.companyrescue.co.uk/company-rescue/options/cva-hive-down (albeit this page refers to CVA plus Hive down, the process is the same). See here for detailed guide to liquidation.

So David, I am happy to talk to you about the processes but perhaps an overview of the target would give us a better steer. We do not charge for initial advice or meetings so I suggest you give me a call on 07974 086779 to describe your objectives for the business in more detail? I will need to know the debt structure (secured, tax and VAT and trade) the sector and your plans. You can keep it confidential for now if you wish.

If we both believe a meeting is appropriate we do not charge for the initial meeting. If we are appointed it is against a written agreement as to cost.

I look forward to hearing from you.

DO YOU HAVE A QUESTION?

Email me now keiths@companyrescue.co.uk

Wednesday, 25 June 2008

Hive down or Hive Across plus a CVA?

"Plain vanilla" CVA's are our stock-in-trade, but sometimes a complex scenario presents itself, so we have to come up with creative solutions.

See our new page on http://www.companyrescue.co.uk/ today called http://www.companyrescue.co.uk/company-rescue/options/cva-hive-down

Working with one of the UK's top insolvency lawyers called Grant Jones, we can provide high quality Hive Down deals that can ensure a company can protect intellectual property, contracts or defined assets. On the back of a CompanyRescue CVA, a Hive Down can be a powerful and effective tool in the appropriate circumstances.

If you have a complex insolvency issue or your client needs to restructure with minimal publicity please contact Keith Steven on 07974 086779.

This what one of our happy clients said about a CVA with Hive Down....

CVA with a Hive Down of Intellectual Property (2008)

"Keith it has been an absolute pleasure paying your fees, you delivered everything you said your company would. Even though we needed to fundamentally change the plan using Hive Down, your team worked tirelessly to get the CVA done. The lawyers you introduced were top quality and we felt confident all along that the CVA proposal and restructuring of the IP would be accepted. Many thanks from all of us".

Paul Rowley, Berkshire.

See our new testimonials page here http://www.companyrescue.co.uk/testimonials

Angels Den Blog: Preventing The Credit Crunch From Affecting Your Business Expansion

Angels Den Blog: Preventing The Credit Crunch From Affecting Your Business Expansion

A useful blog related to the following web site - http://www.angelsden.co.uk/ that shows people how to go about raising Angel investment. You may be a fast growing company or a start up, if so see if they can help you?

Keith

Tuesday, 24 June 2008

What our clients say about us!

Many people thank CompanyRescue. Some just email saying your website helped me - many thanks. Others buy services from us like CVA, turnaround, Time to Pay Programmes and send their thanks by letter, email and sometimes my staff even get choccies and flowers. they like those clients best!

I am happy when people email about the website saying "you have helped", even if we did not talk to them, this shows the site working as we intended.

Today we have posted a new web page with a small selection of the testimonials we have received. Why not have a read? Testimonials page.

Keith

Sunday, 22 June 2008

Sunday afternoon and I am off to London for Wimbledon ; Susan and I are lucky enough to have Centre Court tickets for Monday (opening day). So I won't be posting anything tomorrow as it will be Pimms, Champagne and strawberries all day and no work!

I will think of you toiling away.

Keith

Friday, 20 June 2008

I need finance for my business


Do you need finance, re-finance, or asset lending products?


Did you know that we have a great on line finance calculator written by our colleagues at Creative Finance Ltd.


KSA and Creative have a joint venture to offer state of the art financial advice to our clients. Here is Mark Blayney of Creative trying to rip my watch off my arm off outside our London office. Got to watch these turnaround finance geezers!





Wednesday, 18 June 2008

CVA flowchart guide

Many engineers, manufacturers and practical people cannot be bothered to read lots of words I was told today!

So click here for picture guides to the company voluntary arrangement, liquidations, administration pre-pack, administrations and so on. All of the major insolvency tools in a simple to follow flowchart format.

You can download our flowcharts FREE!! Or simply print them out on your colour printer.

More free guides from CompanyRescue!


Cheers

Is my company insolvent? How can we tell?

Worried about insolvency? Are you asking is my company insolvent or is my business insolvent?

Common man in the pub tales often apply here!. The expert in the pub often says if your company is insolvent you cannot run another company! Bollocks to that.

Here are the three tests of insolvency for any business to apply. if you want to know more please visit our more detailed guide on the following page http://www.companyrescue.co.uk/company-rescue/guides/insolvency-test


The Cashflow Test:

Simply - can the company / business pay its debts when they fall due for payment? For example if you are not paying the deductions from employees for NIC and Income Tax across to the Inland Revenue on the 19th of the month following the month they were deducted, then the company could be insolvent.

If your trade creditors sell to you on say 30 days terms and you regularly pay on 90+ days, then the company could be insolvent.

A director has a legal requirement to understand this issue. If he or she believes that the company has insufficient cash to pay its liabilities on time then they must take advice/action.

The Balance Sheet Test:

Simply - do you owe more than you own as a company or are the company’s assets exceeded by its liabilities?

If yes, then the company could be insolvent. It is important to point out that this test should include contingent or prospective liabilities. (If you need advice on these issues
email us).

Many directors tell us that on a balance sheet test the company is not insolvent therefore they do not need to act. However, under the cashflow test above the company may still be insolvent. So you must act if it is.

In our experience an apparently solvent balance sheet may include items that are overstated, such as obsolete stock and work in progress, or debtors that are not really collectable.

After deducting these items many balance sheets become insolvent. So be prudent - you are legally required to present accounts to show a true and fair picture of the business.

Legal Action Test

If a creditor has obtained a
County Court Judgment, this may demonstrate the company’s insolvency and the creditor may petition to wind up the company. (See compulsory liquidation).

If a creditor has obtained a
statutory demand for greater than £750 and it remains unpaid for more than 21 days, then the creditor may petition to wind up the company. (See compulsory liquidation).

If you believe that any of the above tests are positive for your business, it is vital that you and the board of directors take action to address the insolvent position. However, don’t panic, look carefully at all pertinent issues and consider the taking advice from us.

Adage for the day.... if you have a pain in the chest you don't visit the untertaker do you? So if you have an insolvent but viable business call the heart surgeon (me!) on 07974 086779!

Thats all for today.

Tuesday, 17 June 2008

Ensure you survive the credit crunch

I met with our bank manager yesterday whilst buying some insurance products for KSA from the bank. Sue has just joined our bank from another clearing bank and hopes to build up a strong portfolio of small businesses. We of course want to be one of her best customers!

Anyway, Sue reported that each day the list of her customers on the warning (or excess) list is growing. This means that a number of bank customers are exceeding their facilities by issuing payments or not receiving payments into the account as fast as they hoped.

Now you already know that bouncing cheques is not a good idea, so get our free daily cashflow model by emailing me keiths@companyrescue.co.uk

But what if your debtor days are rising?
===============================

This means the time that your customers take to pay their bill owed to your business.

If you are seeing your customers or clients taking longer to pay their invoices please send me a text or email or post a comment below. You don't have to give your real name!

What can you do when this happens?

Well you can visit our special web page that helps you collect YOUR MONEY by clicking here.

http://www.companyrescue.co.uk/company-rescue/guides/debt-collecting

If you have not got time to visit the page here are some of the main points from that guide.

Dealing with late payment:
  1. Introduce a strict policy for debtor collection built around specific target dates.
    Assertively collect debts – it is your working capital.
  2. Take trade references up – most do not. We are amazed at how many businesses fail to ask for references, how many fail to read and act upon any they get and how lax credit limit enforcement is when faced with "iffy" references.
  3. Buy a subscription to a credit reference agency early warning system. This is particularly important if you regularly open new accounts and or large accounts. It is so cheap to do and can save you, literally, thousands of pounds. Try Creditsafeuk
  4. Refuse to supply even if a "good " customer is over limits, call them and ask what the problem is.
  5. Do they have the invoice, delivery note and are they satisfied? If yes ask for your money. If they still don’t pay consider issuing:
  6. Final warning letter - you will commence action if you do not hear within 7 days - this helps establish that the debtor accepts the debt.
  7. Obtain a County Court Summons form from your local court; issue a copy of it with all details correctly filled in. (We are amazed at how many people go to the bother of issuing half filled out forms!)
  8. Tell the debtor you will issue the summons in 5 working days unless they pay. If this fails:
  9. Issue the summons to the court. After judgment is granted call the debtor for the money. If this fails:
  10. Proceed with a warrant of execution - basically an instruction to the court to collect the money (they send a bailiff to do this). If this fails
  11. Consider a winding up petition if the debtor is a company or a bankruptcy petition if the debtor is a sole trader or individual.
  12. Up to the last step above this is a relatively inexpensive way of debt collecting
    Build a collection system, use "Sage" or other accounts package or use a manual system with trigger dates for every invoice.
  13. Or go to the customer's premises and demand to see the MD, the owner or the finance director, say you will not leave until you receive a cheque! this is a powerful way to get paid.
  14. Charge interest – its your money!!


Remember a good customer who does not pay is not a good customer long term!

If you collect cash aggressively and cut costs (see yesterday's post) then you will survive the credit crunch!

Happy debt collecting!

Monday, 16 June 2008

Pain, PAIN, pain!

Well not feeling too good today, walked 66 miles from Friday am up to last night!

This was from a tiny place called Keilder in the far west of Northumberland where there are no mobile phone masts, hence no blog posts since last Wednesday, to a tiny coastal village called Warkworth.

25 walkers set off and all of us made it to the finish line at 5pm last night and boy did we enjoy those beers. Staying Friday (Otterburn) and Saturday (Rothbury) nights in two super hotels, excellent staff in both made sure we all got well fed and watered, especially the latter!

Many thanks for the team of support staff who made sure we were fed en route and moved our bags and gear around. Finally I would like to thank my sponsors - I don't have a final tally yet but expect to have raised over £2,300 for Cancer Research UK. Of course it is not too late to sponsor me now!

Thank goodness I am not moving far today. I may need a few more pain killers but should get through til bed time!

Wednesday, 11 June 2008

Two new potential clients today!

Back from a trip to see a multiple office estate agency in east Midlands today. In a market where they sell lots of small family houses with an average price of £110,000, sales transactions have fallen by 65% in 3 months. Up to the last financial year end the company bagged a profit of £300,000 a year. Now sales have fallen to around only £500,000 (annualised) !

The owner has been in the business for 23 years, he has never seen anything like this. A company voluntary arrangement will allow him to cut 12 employees and close loss making offices. He is prepared to work for no salary for 12 months or more. I admire this determination and guts, SO we will help rescue this business.

After that we met with a vending machine distributor in Yorkshire. Touch and go whether its viable but the board want to give a rescue a go and will raise some of the own capital to support their CVA. Again SME business people determined to tough out the savage downturn we are witnessing every day now.

If you know a company with serious cashflow problems and or a savage sales fall get them to read this page, for good advice.

http://www.companyrescue.co.uk/company-rescue/options/detailed-cva


So an interesting day in our world, hope it was for you too.

ScS shares fall 38%. Will it survive?

The news today that ScS has had credit insurance withdrawn by an unnamed trade insurer led to a 38% fall in shares today. This is seriously bad news for the company, suppliers won't want to supply stock on invoices that are not insured, could this cause the company a serious cashflow problem.

Could be that a restructure of bank debt will be required, or a rights issue or worse. Not a great time for the company or its shareholders.

With house sales down dramatically and estate agents failing daily, the general public is aware that times are getting harder. So it is probable that big ticket sales like sofa's will be postponed by punters. "Do we need a new sofa, or put petrol in the cars"? Easy decision!

Monday, 9 June 2008

Consumer Confidence - Free cash flow model!

Is it any wonder that consumer confidence is low? (see the news items in all the Sunday papers this weekend (7th June 2008).

Living in an old house that is not fuel efficient we use coal, logs and heating oil in the winter. (Not a great carbon footprint!) We received our heating oil bill last week. In April we paid a record £325 for a tank top up.

In what was a very cold May on the east coast we had to top up again. This time the cost was £475! In a month our fuel costs rose £150! Now being a bit tighter than most Scots I turned the heating off straight away!

Allied to my wife telling me that the cost of the weekly food shop has gone up by 20% at least, then we like everyone else, are facing rampant inflation in our household. That's before you need to fill the tanks of the cars we run.

I cannot see any other result than a steeply rising wage inflation scenario. This will underpin inflation once again.

With wage costs being a relatively large part of many services businesses' budgets this could lead a sharp rise in costs for many SME's. One could counter that argument by saying people are worried about their jobs so they may temper wage claims. However, with REAL household costs escalating as fast as they have in the last 12 months AND the ability to remortgage one's home to release some cash for holidays, cars, and general household spending almost non existent, then we may see a sharp rise in wage claims.

Not a happy economic backdrop for all of us. The remedies?? Well higher interest rates are a blunt instrument but the only one that Bank of England has available. Lower spending by businesses and consumers is a necessity now. The old adage of "make do and mend" will be more prevalent attitudes than bin it and buy a new shinier bigger version!

This will lead to lower sales in shops, car dealerships, estate agents, furniture and household suppliers. We recommend that all SME businesses are aware of their cash position every day, as costs rise and sales may fall.

FREE CASH FLOW MODEL

To that end we are prepared to give away our daily cashflow model to any business person who needs help in handling cashflow problems. USE our model to plan every payment in and out and this will help you stay within your bank facilities or overdraft. It will also impress the bank that you have things under control!

This normally sells for £27 plus VAT so get this while we are feeling generous!

Please send me an email at keiths@companyrescue.co.uk and I will send it to you straight away.

Well off to the garage now for another shock when filling up the tank.

Regards

Wednesday, 4 June 2008

To Telford today!

Have been to Telford to see a client today. I used to be a director of a Venture Capital / rescue company based in Telford and London, so know the town and the journey from Euston well.

Telford is where www.companyrescue.co.uk was conceived and born!

Didn't call it Telford Rescue for obvious reasons although some people may argue that Telford does need some help!

Have helped rewrite the rescue strategy with the directors of my SME client today, we are outsourcing manufacturing, losing half the staff and cutting sales forecasts by 55%. Again this is survival mode even though current orders are still quite strong, we are planning for the sales to fall sharply as recession kicks in. Sales manager will now be targeting £1.2m not £2.7m and making a small profit of £20,000.

Remember that old adage applies - turnover is vanity, profit is sanity.

It may be possible to re-grow sales in future and in fact we may be being too pessimistic in our planning, but better to still be trading in 12-18 months than falling on the sword of high growth expectations!

Arriving back in Euston so bye for now!

Monday, 2 June 2008

What does the credit crunch mean for our clients

Looking at the BBC today (BBC NEWS Business How small firms can survive the crunch) we can confirm that one company after another is telling us, "Well since the credit crunch we have seen a fall in sales".

Anecdotally there is a lot of evidence of a downturn in the UK economy, today Bradford & Bingley, last week Silverjet fell into Administration, tomorrow chains of estate agents could fail.

Its often a mystery to us where the economy's growth statistics come from and how they are calculated given the amount of bad news out there. I suppose a small company or two failing does not have much impact on a huge economy like the UK's but with thousands of SME companies and larger quoted companies reporting sales falling, then is it fair to say the stats are lagging well behind the reality for many business people?

In the last two weeks we have heard the same story at least 5 times. "I am an estate agent and my sales (£'s in the till, not just house prices) are actually down 45-60%".

This level of sales cannot be sustained without massive cost cutting and retrenching. We hear many EA's are waiting until the green shoots of growth return, believe me they will be a long time coming!

We are working with a medium sized group of estate agents and have led a restructuring that will allow their business to survive for 18 months of even LOWER sales than they are currently seeing. The company voluntary arrangement process is we think the best tool for this.

SLASH COSTS TO SURVIVE!

Closure of non core operations, reduction of people costs and handing back cars for example are just some of the radical and far reaching steps we have taken. Now their cost base is down 50% as is the level of sales.

Will they survive? I think they will, they took action sooner than their competition, they appointed KSA to lead a downsizing operation and they will consider ANY means of survival.

My theory is it will only take a 10% rise in sales volumes to transform a survival strategy into a very profitable business again. With 40% of all EA's expected to fail in 2008-9 this should lead to modest sales growth for the survivors even if house sales stay at current levels.

For this estate agency company that relies upon confidence, survival for 18 months may seem a slightly negative turnaround strategy, but we believe it's the right one in uncharted waters like the current credit crisis.

When a modicum of confidence returns to lenders they will see a sunny future.

UPDATE 8th June. The headlines in the financial press say Estate agents 'facing job purge' up to 15,000 estate agents could lose their jobs this year due to the sagging housing market, research has suggested.

Well we can concur with that, the answer for many is creditors voluntary liquidation (liquidation) or if trading as sole traders - bankruptcy. To avoid this people need to look at the above article and decide if the business can be saved.
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