Young (ltd co) business with massive cash flow problems; need independant advice.

G

GAP

Guest
Hello,
Does anyone know of a place to get urgent independent advice that won't cost the earth?

I have a relatively new business that is now reaching a massive cash flow crisis and I'm not sure if it can even survive another couple of weeks.

I am not a business person; my accountant gives only general advice when I ask a specific question, (maybe I'm not asking the right questions) and I'm not sure if I shouldn't cut my losses and not be adding more debts that I may be liable for.

It's a limited company and I am a director.

Thanks for help. Greatly appreciated.
 
Re: Independent advice

is your problem that you have issued invoices for products or services which people are slow to pay or is it just your sales or services are slow ?
if its the former there are invoice discounting companies which will help with your cashflow ,if its sales are slow you should trim any fat in your overheads and push your business to new customers .be more specific and maybe i can advise you.if you own a business you are a business person good/or bad but keep the head up as things can usually be sorted with level thinking.
 
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Re: Independent advice

thanks ,

the problem is that there are no fat expenses.. simply there is no cashflow.. the expenses that are there are VAT PAYE/PRSI things like that .. and office rent..

and ofcourse the problem lies in that the sales are slow but other than the usual advertisements we cant do anything as it costs money.. money which we do not have!

More importantly our problem is that this situation is immediate and that we might not be able to meet our expenses/wages by next week.
 
Re: Independent advice

Im Afraid If Its A Sales Problem Its A Terminal Problem,if Nobody Wanted To Buy Big Macs And Fries Mc Donalds Would Not Last Long Either. If You Think You Have A Good Product To Sell You Should Consider Getting Rid Of The Office ,tell Employees The Situation And Wind Up The Company Fast. Start Fresh From Your Home(it Can And Has Been Done) And Register As A Sole Trader,(alot Less Hassle) Do All The Jobs Yourself Eg.sales Rep.,office,marketing ,etc.if You Have A Fancy Car With Fancy Payments Get Rid And Lease A Van With Your Logo (free Ads)deliver Your Goods ,meet Your Customers,chase New Ones.the Van Is Your New Office. What Business Are You In ? Selling ? If You Would Rather Not Say I Underst And (an Office And Staff Are Fat When Your Against The Wall)
 
Re: Independent advice

If you have paid VAT on your expenses, you should be claiming a VAT refund from the Revenue in your bi-monthly VAT submission
If you are owed VAT from revenue, the Bank may be willing to offer a credit line for that amount, but this will only be a short-term stop-gap.
In the lng run, you need to consider whether there is a likelihood of sales increasing, and what you can do to improve.
In the cold light of day, are you better off stopping digging and cutting your losses?
 
setemupjoe said:
Im Afraid If Its A Sales Problem Its A Terminal Problem,if Nobody Wanted To Buy Big Macs And Fries Mc Donalds Would Not Last Long Either. If You Think You Have A Good Product To Sell You Should Consider Getting Rid Of The Office ,tell Employees The Situation And Wind Up The Company Fast. Start Fresh From Your Home(it Can And Has Been Done) And Register As A Sole Trader,(alot Less Hassle) Do All The Jobs Yourself Eg.sales Rep.,office,marketing ,etc.if You Have A Fancy Car With Fancy Payments Get Rid And Lease A Van With Your Logo (free Ads)deliver Your Goods ,meet Your Customers,chase New Ones.the Van Is Your New Office. What Business Are You In ? Selling ? If You Would Rather Not Say I Underst And (an Office And Staff Are Fat When Your Against The Wall)
Click to expand...

Setemupjoe, Please do not post using 'ALL CAPS', the system tries to correct this but leaves every word with a capital letter and the post remains very difficult to read.
aj
 
Hi Gap,

Is your accountant a qualified professional accountant?

I know that there are professional accountants and some management consultants who specialise in helping companies who are experiencing severe trading difficulties.

aj
 
Re: Independent advice

GAP said:
thanks ,

the problem is that there are no fat expenses.. simply there is no cashflow.. the expenses that are there are VAT PAYE/PRSI things like that .. and office rent..

and ofcourse the problem lies in that the sales are slow but other than the usual advertisements we cant do anything as it costs money.. money which we do not have!

More importantly our problem is that this situation is immediate and that we might not be able to meet our expenses/wages by next week.
Click to expand...

Trim the fat... lose the waged workers who are seemingly not bringing in any income, move to your house and save the office rent. Otherwise, close and don't be digging a deeper hole.
 
I am not a business person; my accountant gives only general advice when I ask a specific question, (maybe I'm not asking the right questions) and I'm not sure if I shouldn't cut my losses and not be adding more debts that I may be liable for.
Click to expand...

Hi Gap

Sorry to hear about your problems.

I am concerned that you say that you are not a business person. I am also concerned that your accountant is giving you only general advice.

If a limited company goes into liquidation, the directors may be made personally responsible for the debts. If your accountant is not advising you on this issue, then you need to get a different accountant immediately.

If you want to email me with some information about the size and type of business you are in, I will see if I know anyone who might be useful. Do you have any friends in business? Do they have a good accountant?

Again, it depends on the type of business you are in, but if you know of a more established business in the same sector, who is not a direct competitor, they might be willing to advise you.

Many new businesses fail. It is no shame if you have to go into liquidation. but if you have to go into liquidation, you should be taking action to minimise the losses to suppliers and the Revenue.

Brendan
 
There is some good advice in the previous posts. As an alternative view...

If you genuinely believe that the business will eventually be profit making but just needs an injection of cash then try to find an investor. This may help you invest in some of the advertising you say you may need to sell to new customers. However, you must be certain that the business is profitable in the long run, otherwise you will be digging the hole deeper and leave yourself with eve bigger problems later down the line.

If your accountant is not providing you with specific advice for your situation then he is not giving you a professional service. As mentioned by the other posters you should seek advice from a professional.
 
Newbie makes an important distinction between cash flow problems and lack of profitability.

If your business does not make a profit, then it will end up shelling out more cash than it takes in, and will have to fail.

If you have big debtors and/or big stock levels and/or heavy capital equipment needs, you may be profitable but have cash flow problems.

The first thing to do is to assess if the business is profitable.

If it is profitable, but cash negative, then some form of refinancing would be required.

An investor will invest in a profitable company with cash flow problems, but not in an unprofitable company.

Brendan
 
Hi Gap - it's hard to identify the solution without a bit more data. Maybe a focus on the outgoings would help. As the short term problem will hit you over the next few weeks, in terms of identifying cash commitments within that time frame, can you make a list? For example:

- rent?
- tax (VAT, other)
- wages - permanent employees/ contracts
- invoices from suppliers (can you break these in to categories? how long overdue are they). Inclde all suppliers such as car lease company, utilities, service companies, any products bought.

Presuming your project income/cash in the short term cannot cover the outgoings, perhaps we can look at minimising the outgoings? There are short term mechanisms (such as extra loans or invoice discounting, which might be useful to a truly pofitable enterprise) but without proper financial advice (which seems to be lacking here), these should be avoided.

Finally, the key question is profitability. If profitability is there, it's certainly worth managing through this crisis.

Bob
 
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