Please visit for confidential help and insolvency advice or email

Tuesday, 30 December 2008

Happy New Year, enjoy while you can!

Happy New Year!

So, here is my last blog of 2008, I guess most won't read this until 5th January when most people are back to work and facing the dark days of January. I hope you had a good break, a relaxing time with too much food and drink and now realise, like me, that some exercise would be a sensible idea!

Over the week since my last blog Christmas has come and gone, sales have started, many retailers have failed with many more teetering on the brink.

Retail disaster over Christmas? If you need to close non performing retail outlets, consider Pre-Pack Administration or company voluntary arrangements.

This last fortnight saw fashion retailer USC pre-packaged through administration back to previous owner Sir Tom Hunter; Whittards sold to a private equity company; Zavvi enter trading administration; Officers Club in a pre-pack; Adams on brink of Administration and so on.

There will be many more, today I took a call from a distribution company, its biggest customer? TNT, it was doing most of it's work as a subcontractor to TNT and now it has told them there is NO WORK for the foreseeable future as the TNT depot and order book is virtually empty!

Big name retail failures take the headlines but this small Manchester company won't survive January without work, the MD will probably lose her home and the staff their jobs.

This is the flip side of the big failures and over the next 3 months more than 300,000 people will lose their jobs, as a result of the crash of 2008, in SME companies.

Mind you having been to the "January" sales on Saturday the question seems to be "recession what recession"? Or are people just buying bargains and now, and will not spend unless retailers give them a big discount in future? Time will tell.

Once again happy new year to one and all.

Tuesday, 23 December 2008

Season of tidings and joy OR despair and worry

It's the time of year for reflecting on the year just ending and the new one ahead, generally the last 16 years or so have been boom times and people could look ahead with optimism and excitement.

As we draw close to the witching hour of rent and salary payments many retailers may not be able to see past 29th December. That's the day that many have to find 3 month's worth of rent and pay December salaries. If the big insolvency boys are to be believed there will be up to 15 major retailers going into insolvency procedures (typically pre-pack administrations) over the festive period or beyond.

For the management and staff involved this will be a frightening time: will I get my redundancy? If so how much redundancy am I entitled to? How will I pay the mortgage? Will I get a new job?

Hardly the stuff of tidings and joy for those people. Expect to see 100,000 plus people lose their job in January 2009, making this the worst month since the recession of the early 90's. But this will only be the start of much higher job losses for a period of up to 12 months.

Some of the at risk retailers in my view include: Zavvi, DSG International (Currys), Whittards of Chelsea, Ponden Mill and Clinton Cards.

To my regular readers ignore the gloomy prognostications and have a great time over the break.

KSA will be closed from lunchtime today until Monday 5th January but anything urgent please cal me on 07974 086779 or email

Wednesday, 17 December 2008

How to Terminate Leases and Contracts using CVA

In these tough times for retailers and other companies with surplus property we are often asked, "how can we exit a lease(s) without huge legal costs and penalties"?

The old fashioned way is liquidation or of course administration can be used. Alternatively we can terminate leases with the directors remaining in control, without terminal insolvency and this can often leave a healthier business to recover.

See this new guide here to terminating a lease in a company voluntary arrangement or CVA

If you have a client or business that needs to shed property or face unnecessary closure, call Keith Steven now on 07974 086779.

Friday, 12 December 2008

Vauxhall going into administration?

Vauxhall going into administration may not be as shocking as many people think!

Why? Well let's look at look at two key issues for General Motors UK Ltd (the actual trading company in the UK):

Number 1: look at its balance sheet: at 31st March 2007 it had an insolvent balance sheet to the tune of (£396m) yes negative to £396m. What does that balance sheet look like if the supporting parent goes into Chapter 11 in the US? INSOLVENT.

Number 2: look at its credit rating - ZERO. So its highly likely that suppliers to General Motors UK Ltd cannot get any credit insurance or indeed factoring /discounting of their debts. So as the board of those suppliers do you look at the news, consider the issues and STOP supplying GMUK? Or do you keep supplying?

Incredibly complex decisions need to be made by hundreds of suppliers to Vauxhall and other car companies over the next few weeks.

Wednesday, 10 December 2008

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Does it make you mad when a client comes to you with a cashflow crisis and the usual result is they go into liquidation? What if you had could offer high quality turnaround and insolvency advice? Would you prefer to KEEP your client and earn from them in future or see them liquidated?

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The people behind are KSA CompanyRescue; we have helped over 500,000 people since 1994. Our website is designed to offer high quality and useful advice to businesses in distress. KSA have been in turnaround for over 13 years and have directly been involved in rescuing all sorts of companies from £nil to £500m sales. Over 300 companies have been helped directly by KSA in that time.

“Keith Steven of KSA is the leading expert in CVA’s in the UK, I have absolutely no hesitation in recommending you and you can give my telephone number to any potential clients!”

Quote from a chartered accountant, former 3i senior manager and now entrepreneur; Mr Stephen L, who used us to restructure one of his companies.

Clearly, when you have a specific cashflow or insolvency problem that you need to deal with, you may ask your friendly local insolvency practitioner to look at the problem. But will the client survive their advice?

Otherwise most people find that there are few places to get QUICK and ACCURATE ANSWERS that don’t involved BURYING the client!

Of course we understand that you generally won’t want to incur fees hunting around for solutions when the client might fail. Use our service and you can deliver answers quickly, without cost AND RISK to your firm.

Imagine being able to give quality advice and options to your clients, supported by case law (where appropriate), authoritative case studies and printed guides from our Turnaround and insolvency experts.

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Simply subscribe with your email address, business name and telephone number today at or call 0800 9700539 now.

Remember, it’s much more difficult to secure a new client than it is to help save an existing one!

Tuesday, 9 December 2008

Employees rights in Administration

New guide page launched on today for those thousands of people every week that face the extreme uncertainty and worry of their company going into administration.

Common questions we are hearing on our help lines

What are my rights if I lose my job?

What are my rights if the administrator continues to employ me?

What are my rights if I am a subcontractor?

Please visit this new page now

Or if you prefer visit the very good site at DBERR (was DTI)

If you want any other topics covered on our websites please ping me an email at


Monday, 8 December 2008

What does going into administration mean

Over the past weekend I have heard the question "what does going into administration mean"? several times.

I thought a simple link page to the administration guides we have on our website might help people get the answers quickly, please click the link below

Last week saw the following substantial companies enter the administration procedure.

JA Magsons - York - toy wholesale
Fitzgerald Lighting - Bodmin - lighting manufacturers
London Scottish Bank plc - London - sub prime lending
Bowie Castlebank Ltd - Glasgow - multiple retail
Unoco Group - Nottingham -Education sector
Pettifer Construction Limited - Warwickshire - construction

These well known names are just the tip of the administration iceberg, unfortunately thousands of jobs were lost last week and we will see administration numbers and job loss numbers soar as the new year starts.

Tuesday, 2 December 2008

Who controls whether a company enters an insolvency procedure?

When we ask this question the immediate answer that springs to people's mind is the banks? Directors? Creditors? The tax man?

Well, you would be partly correct with that perm any one of 4 approach!

Of course directors have a legal obligation not to trade wrongfully or to trade when the company is insolvent and they know it has no reasonable prospect of paying its debts as and when they fall due. Witness the directors of Woolworths last week having to put the company into administration because cashflow was so bad that it could not see how to pay wages and creditors.

There are many stories of banks forcing companies into administration or receivership because the company was so distressed the banks stepped in try and control things. So yes bank's often do take part in the decision to enter insolvency (and not just their own)!

With HMRC responsible for some 60% of all winding up petitions (obviously before being told to become the next national bank for SME's) one could argue that aggressive creditors control whether a company goes into an insolvency procedure.

But there is another force at work here. Many companies use factoring, invoice discounting and trade insurance to assist with working capital in their business. In the last 2 weeks I have been planning to write this piece because it is the TRADE INSURERS that are now controlling the future of thousands of UK companies SME or large companies.

If the trade insurer removes cover on a debtor company, your company could suffer rapidly. Last week I met with a company that had suffered a £300,000 hit to cashflow because the factoring company it used had clawed back advances against General Motors invoices.

This week I am reliably informed that suppliers to Ford have had a similar unilateral decision forced upon them. Indeed this was from an ex client who had successfully exited their CVA. Perhaps this could be rectified by Ford Motors paying in say 30 days or less, if not this could undo 3 years of hard turnaround work.

Rover was brought down by trade insurers refusing to cover their risk, Woolworths faced the same ignominy last week, others will see the same thing happen to them and usually to one of their larger customers.

Cascade this down through the supply chain and big problems lie ahead even for profitable companies.

So the answer to my question - Atradius, Euler Hermes and Coface? If you don't know these names you soon will.

Monday, 1 December 2008

Falling off a cliff...the worry that REALLY troubles SME directors

With Government fiddling whilst UK business burns, its distressing to hear story after story of doom and gloom. Good job I am a relentlessly optimistic person, you have to be to do rescue and recovery work!

People are asking me the same questions every day now, "what are sales like for other people? "have they fallen off a cliff"? "I am desperate for cash, my customers are slowing down payment, what can I do"?

These are of course anecdotal and based upon the micro business issues they face, but today the bigger picture started to emerge. Sales HAVE fallen off a cliff, read the excerpt from the BBC news site today below

Record decline in manufacturing

Collapsing new orders have been blamed for the weak figures. British manufacturing shrank in November at the fastest rate since the figures began being collected in 1992. The Purchasing Managers' Index fell to 34.4 from October's figure of 40.7, which was both the lowest level and biggest fall seen on the index. The fall in the figures was based on a collapse in new orders.

Alan Clarke at BNP Paribas described the index as being at "absolutely horrific levels".
"We are already seeing a pretty rapid pace of contraction in hard manufacturing activity in the UK and it is going to get even worse.

Worrying times indeed, I now forecast that cashflow will reach critical levels in the weeks after Christmas, with factory and business shutdowns its easy not to pay your creditors, trouble is your customers won't be paying YOU either.

So manage cash, costs and spending NOW.

Friday, 28 November 2008

Woolworths - what is administration? Lots of people asking us this!

The news that Woolworth was failing has been copiously covered by the media recently and our websites have seen a sharp rise in activity in the last 3 days mainly around the word "administration".

What does it mean "go into administration", visit our website to learn more about the tool.

Interesting to see that The Guardian estimates that Deloitte will be costing £22,000 an HOUR. Top insolvency partners from Deloitte are charging £600 an hour and senior managers £400ph. So trading this business until after Christmas will see total fees charged of at least £7m assuming 8 hour days, 6 day weeks !

That's the cost of insolvency I am afraid and the other costs such as the thousands of jobs yet to be lost, £m's of creditors monies lost are still to be counted.

Monday, 24 November 2008

New CVA Case Study 27

New CVA case study published today, this is interesting for a number of reasons including, Hive Down of Assets, CVA, Winding up petition, HMRC and a very supportive bank for the rescue we led.

CVA Case Study 27

Well Managed Hardware and Software distributor £4m sales South West and London based.

Solving problems with bank funding are becoming quite common for CompanyRescue advisors and turnaround experts

At the time of writing (November 2008) we all know the big banks are under huge pressure to lend, but they also need to repair balance sheets and avoid impairment charges from future customer failure. So they are tightening up on invoice discounting and factoring rules.

This well run company was suffering from poor sales in early 2008, it sacked the sales director and recruited a new sales person, she was able to drive sales up and fill the order book, as this company has some fairly unique products supplying to (irony here) banks and stock markets! As some of the larger institutions initiated cost cutting drives they began to see sales rise.

Its invoice discounters / bank did not want to fund some of these customers thorough invoice discounting and reduced the facilities. This impacted cashflow and the directors could not meet PAYE and VAT payments. Initially they asked for a Time to Pay Programme (see our guide by clicking link.

HMRC threatened a winding up petition as the debt was rising fast, we then suggested that TTP deal was not going to assist with cost cutting, job losses and the fundamental restructuring required. So we began the CVA process and helped the board reorganise the company.

HM Revenue & Customs agreed not to issue a Winding Up Petition (WUP) but wait for the CVA plan. That did not stop a very aggressive US supplier issuing a WUP for £170,000. The advertisement of the petition would normally lead to the bank freezing the bank accounts but we knew that there was a good prospect of the CVA being approved by creditors.

KSA and the board informed the bank of the CVA plan and the WUP, yet the regional director in the South West agreed to KEEP THE BANK ACCOUNT OPEN!

This was of course, brilliant news and showed the bank truly was supportive. By working hard and arranging a quality CVA proposal the creditors approved by 80% (you need 75% of value of voters to be in favour).

The CVA saw the company's trading and assets Hived Down to 3 separate trading companies with 100% ownership by the parent company. This enabled sales to be channeled through 3 different vehicles and stopped cross security issues. By accepting the CVA the creditors also accepted the CVA Hive Down of the assets.

We prepared 4 sets of forecasts for each company and these were published to the creditors to show the new structure was viable and profitable. What was the CVA DEAL? Payment of 100p in £ of debt over 3.5 years. This is a great outcome for creditors if achieved of course.

As to the petitioning creditor, well they TOO will receive 100p though they seemed to prefer knocking the company over and getting ZERO.

Never did quite understand that bizarre logic, however after the CVA was approved the WUP hearing was held. The FD of the creditor attended the hearing perhaps to see the sword fall on the company's neck? What a shame the judge dismissed the petition summarily.

The equity of the CVA process shone brightly thorough this case. The majority wanted their debt repaid, the bank wanted to support a CVA restructure, but one strange creditor did not. Equitable outcome for all?

Want to know how to Hive Down assets for a powerful restructure of the company, talk to Keith Steven on 07974 086779 now.

Sunday, 23 November 2008

RBS lending pledge to small firms - Can we believe this?

Well that's alright then, all SME's banking with RBS or NatWest will have their overdrafts protected and see no bank charges rises for a year. All other big banks exepcted to follow according to the media.

Given we now own 60% (or so I am told) of RBS you wonder if there will be a socialist banking agenda next year or so. Will Gordon and Alistair apply the sames logic and ineptitude to RBS as they have to the wider economic problems?

"We are a government committed to tax and spend, in this global economic crisis" says Gordon "Its RIGHT to SPEND our way out of recession" it? Really? I don't think giving a drunk man more drink would be seen as a cure by anybody with some wit?

So why do that to an inebriated economy that has been partying for 14 years? "Here, have another, its only money"!

Getting back to the main theme here, imagine if you will, a struggling company that cannot pay the wages and salaries next month? When Mr Small Businessman goes to the bank and asks for another £50,000 overdraft will RBS be forced to lend it? No I thought not.

The fact that the cost of his non existent overdraft won't go up though, is ok. Actually its irrelevant. Most banks got rid of most SME overdrafts a long time ago, they encouraged factoring instead because in insolvency they have more security over an assigned book debt than plain vanilla overdraft security.

Isn't it amazing that Government has finally discovered the SME agenda? Can this be the same Government that announced in its last budget that it was increasing corporation tax for all companies making under £300,000pa? Oops, that'll be the same small businesses that they all of a sudden want banks to lend to?

Oh I get it, these small businesses need the cashflow to pay Corporation Tax, PAYE and VAT of course. So let's get the banks to lend to SME's coz the Government has a cashflow problem!

Mixed messages here, but seems to me we are all being taken for mugs in the SME world, we may generate 53% of GDP according to The Federation of Small Business (don't quite see how the maths works there) but my clients tell me they cannot get overdrafts, factoring, loans or banks that will even return a call!

My message to government.... stay the hell out of SME businesses, let the market work this recession out and let the poorly run, badly managed businesses out there get taken over or fail. Oh and start containing spending- not increasing it.

Will they listen? NO! They will be bribing people with tax and VAT cuts on 24th November to encourage SPENDING, but its my guess that people won't want to spend their way to oblivion, they are too worried about their jobs, houses and livelihoods. Most people I know want to save now.

So this week will be a hugely important one for the politicians and SME business alike.

Wednesday, 19 November 2008

Woolworths the next big name to fail?

Woolworths the next big name to fail?

Restructuring specialists to acquire household name for £1?

Next up to enter the Hilco clutches is the household name value retailer, Woolworths. Some followers of this blog will recall I predicted that MFI would fail when Hilco entered the fray? Well after closing most of the poor stores, MFI has been restructured, downsized and it continues as a much smaller entity. Thousands of jobs have been lost at MFI.

After divesting itself of the 2entertain distribution business and possibly dealing with a large pension black hole, Woolworths will be gobbled up for £1.

What price mass closures of Woolworth stores when rents are due 29th December, watch this space!

It’s likely that Woolworths won’t be the only big name or retail legend that bites the dust. Across the UK landlords are facing demands from their tenants for a change to the quarterly in advance method of rent payments. “Please let us pay monthly to help cashflow”, is the cry!

Well landlords may have to listen because many retailers won’t be able to meet the cashflow demands of paying rent at 29th December if Christmas is a flop… So how many empty stores will there be come dark days of January?

Tuesday, 11 November 2008

Gloomier and gloomier

Incessantly bad news seems to be the order of the day, today.

Just visit the BBC business website today, to see what I mean. The most striking headline is that Estate agents sold an average of 10.9 houses each in the last quarter. Yes fewer than one per week.

That's not enough to pay staff pay and commissions, salaries and fixed overheads. So why aren't more Estate Agents going bust? I put it down to the triumph of hope over adversity AND a decent cash balance when this crisis kicked off? The clients we have recently worked with ran out of cash sooner.

In November we have saved two professionally run companies with 7 branches each: both have slashed employment costs (with nil cash cost), both have removed management overheads, both have focused on SURVIVAL. Both have kept branches open on skeletal staffing levels.

You may recall we also rescued another multi branch firm in October?

Interestingly our client based in the South East saw October sales just ahead of our gloomy forecast and November has continued with some sizable sales made and COMPLETED. So that means that they will still be here come January.

I wonder if the many struggling small to medium groups of agencies could learn a thing or two from our clients? Why wait til the company runs out of cash, notwithstanding your legal obligation to act if the company is insolvent?

Talk to me in confidence if your agency group needs a lifeline.

Keith 07974 086779

Thursday, 6 November 2008

We are delighted to bring your more information on a recent case for KSA.

We assisted a south east based Law firm to file a company voluntary arrangement (CVA). [ ] We believe that this is the UK’s first CVA for a Limited Liability Partnership or LLP. If you know otherwise please email me.

Case Study for a LLP
After a sharp downturn in business from collapsing property sales and conveyancing, the designated members (equivalent of directors in a limited company) were facing a crisis.
HMRC had been pursuing arrears of PAYE and VAT for some months and the Bank,which was Barclays in this case, had asked the well known insolvency firm,BDO Stoy Hayward [ ], to look at the options.

They concluded that there was a strongly viable business but that a cash crisis was imminent. This firm looked at the options of administration [ ]led restructuring, CVA, [ ] trade sale and so forth for the bank and members.

Independently the designated members took advice from KSA. I believed that we could avoid administration and the serious repercussions it would bring. I was not aware but soon learned that the Solicitors Regulation Authority has the power to remove clients files and trust accounts upon granting of an administration order.

Regulation 8.2 of the Solicitors Recognised Bodies Regulations 2007, recognition of the solicitors will automatically expire if a winding-up order or administration order is granted under Part II of the Insolvency Act 1986, or a resolution is passed for voluntary winding-up, or an administrative receiver is appointed, in respect of a recognised body.

What does that mean in plain English?Well simply the firm would lose all of its clients because the Solicitors Regulation Authority would remove the legal work and clients from the company to protect their interests, upon the granting of an administration order. In lay terms a SRA hit squad would arrive and remove all of the files and take control of the trust accounts etc.

Thus the business would cease to exist as a trading entity. Even more pertinent the SRA ranks ahead of the bank’s security!!

Even with personal guarantees from designated members, an administration would have resulted in a serious shortfall for the bank and obviously the trade and tax creditors.

Whilst the various parties were conferring as to the path to follow, HMRC issued a winding up petition [ ] with an accelerated hearing date. This gave the business only 4 weeks to propose a deal and get it accepted. We were appointed to construct the CVA deal by the designated members with the knowledge of the bank and the bank’s advisors.

I headed up the deal structuring supported by my colleague Marie Moody who dealt with the creditors issues and built the statement of affairs. We brought in one of our expert forecasters and he and I worked with the members to build a workable plan.

KSA persuaded HMRC not to advertise the winding up petition, to which they agreed providing a draft CVA was made available within 2 weeks.

The business reduced headcount and closed non performing units. Finally, a workable CVA was agreed with Barclays and filed in District Registry. HMRC agreed to stay the petition hearing until after the CVA was approved. Given it was the largest unsecured creditor, HMRC’s positive vote for the proposal led to that approval.

Its public knowledge that the enormous impact of the Credit Crunch has led to many failed estate agents, law firms and the like, this LLP is still trading today with the protection of a CVA [ ].

Three things contributed to the success of this job:

1. The good quality information and accounting information produced by the client. We were able to collect all the data we needed within a few days of commencement. This is unusual. It’s essential to have a good management information system.

2. The support of the bank and BDO Stoy Hayward who were very keen to preserve the value of the business and work quickly towards a workable deal.

3. HMRC – the Voluntary Arrangement Service [ ] was not involved with the initial winding up petition, however with their advice and involvement we were able to stop the petition advertisement and allow a short breathing space to get the CVA built.

Summary, LLP’s can propose a company voluntary arrangement that binds the unsecured creditors if approved. There is no liability for the designated members of the LLP, so they need not propose individual voluntary arrangements [ ], as would be the case in PVA or partnership voluntary arrangement.
[ ]

So the very powerful CVA technique can be a useful restructuring tool for law firms which are trading as LLP’s and whilst the Solicitors Regulation Authority will keep close watch they won’t step in to remove the risk for clients and trust accounts.

Tuesday, 4 November 2008

KSA Companyrescue grows again

I am delighted to announce that Eirlys Lloyd and Stuart Nicholls have joined KSA in our head office as corporate advisors.

Stuart is a post graduate in Business coupled with many years of business experience in the leisure, holiday and hospitality sector.

Eirlys too has many years of advisory and business experience in the legal profession and after that in the hotel and small business sectors. For those like me who have not seen this name before Eirlys says her name "is Welsh and rhymes with wireless"!

Our head office advisory team has grown to 10 now. This continues our planned growth and builds more strength in depth to help our clients in these straightened times for SME companies in the UK.

I look forward to making further announcements about growth for KSA CompanyRescue in the next few weeks.

Meantime, given that all my staff HAVE to read this blog (mean or what!!) I wish Stuart and Eirlys well as they learn the ropes with their new colleagues.

Tuesday, 28 October 2008

Scottish Company Rescue Culture - is there one?

After my post in July (see link here Rescue companies in Scotland??) we have kept building our activity in Scotland.

We are currently working on 5 new company voluntary arrangement (CVA) clients in Scotland having had 3 deals approved already this year. Two others didn't make the distance to the CVA meeting unfortunately, with the credit crunch to blame for both falling down and being liquidated some weeks later.

This is a sad statistic for those involved, but KSA has reached and been appointed to assist 10 Scottish companies in 2008.

Not fantastic but with the almost complete lack of interest in company rescue culture in Scotland we seem to be punching above our weight.

As before if you are a Scottish company with problems, or an accountant or advisor to a Scottish company get in touch with KSA CompanyRescue.

Sunday, 26 October 2008

Once in a lifetime financial crisis?

In the literally dark days of the 1974 recession the lights went out and I remember a job my father got me to do, "Keith, go and light these paraffin lamps and candles, oh and make sure we lock the doors if the lights go off"!

Each week we had to plan how to get every available light source in place to ensure customers in his store could see us and the merchandise! Oh and we locked the doors so they didn't walk out without paying!

It was the era of the 3 day week, power on and off sometimes without warning, Government taking on Unions and frequently coming off second best and people losing jobs by the thousands every week. This recession saw GDP fall by "only" roughly 3.5% over the piece.

What then are we to make of this observation in the week that Bank of England and Prime Minister alike uttered the R word?

Charlie Bean, BOE Deputy Governor of the Bank of England, said last week:

"This is a once-in-a-lifetime crisis and possibly the largest financial crisis of its kind in human history. In terms of the impact on the real economy we are still in early days."

Wow Charlie, so it's even worse than 70's recession which was a diabolical period for the UK economy? Even worse than the great Depression? Even worse than Japan's "lost Decade"?

Extrapolate that statement further and Charlie Bean thinks we are in for a hell of a couple of years from 2009-2010. Yes the UK saw 0.5% drop in GDP last quarter (quarter ended September 2000) but to be worse than the recessionary period of 1980-81 we will have to see GDP fall by 6% MORE to even equal that awful recession when GDP fell 6.5%.

No economists that I have followed recently expected 0.5% drop in Q3, far less 6.5% over 2-3 years!!! So does the Bank of England have a better crystal ball or is Mr Bean just plain scared because he has not seen a recession before?

Either way I am VERY WORRIED, reading Sunday papers today, a couple of older and wiser economists and former senior industrialists recounted their memories of the last recession. Blimey I must be very old being able to remember that 1974 story? That's 3 recessions or make that 4, that I have seen. Maybe time for a lie down.

Look I have been saying for 12 months or more on my websites and blogs, things ain't going to get better they will get worse. Accusations of scare mongering were made against me in 2007, but we have been telling businesses for over a year, get the tin hats on and try to survive.

Boring and repetitive end to another Blog post but make sure you have a plan to survive "this once-in-a-lifetime crisis and possibly the largest financial crisis of its kind in human history".

Get your free daily cashflow model by sending me an email or calling my team on 0800 9700539, The cost is zero but we will want your email address and contact details.

Get your FREE KSA CompanyRescue guide to cost cutting in business by clicking here.

Need to spread HMRC payments? Don't wait for Alistair Darling to copy David Cameron's suggestions get your Experts Time to Pay Programme and we will guide you step by step on how to spread tax arrears over 12 or even more months. Click here for further details.

Finally, if the worse comes to the worst, and you have been made redundant unexpectedly, you can get information on what to do next by visiting our special page for redundant employees, by clicking here.

Have a good week and don't forget, call the UK's SME CompanyRescue champions if you need help or advice on 0800 9700539, we don't charge for any initial advice or meetings!

Friday, 24 October 2008

Recession now!

Well the dread R word has been used a lot recently by Mervyn King (Governor Bank of England) and of course Gordy, they obviously knew what we all found out today.

Recession big style is happening now, not next year!

A huge 0.5% drop in GDP last quarter tells its own story, remember this is for Q3 to end September 2008 - since then we have had world wide financial panic and wall to wall media coverage of the slump.

My guess is that Q4 will see a bigger drop maybe even as high as 0.7%. This would take the economy into recession formally, definition wise, but in the real world will result in thousands of failed businesses.

Now is the time, if you have not already to get that tin hat on, cut costs, manage cash daily (ask for our simple to use daily cashflow model) and make any survival plans you will need.

If cashflow pressure turns to crisis talk to us now about how a CVA ( company voluntary arrangement) could save your business, cut staff costs overnight and keep YOU in control.

Tuesday, 21 October 2008

David Cameron and Small Businesses. Nationalised banks.

Dave seems to be getting the message that SME's are natural voters for the Conservatives!

This last week he has demanded 6 month VAT payment holiday for struggling small companies. This seems a good idea on the surface but it would have a big impact on

A) The Exchequer - cashflow for the UK Government will be pushed out by thousands of SME's not paying VAT for 6 months (at a time when Gordon has said all Government and Councils should pay SME's in 10 days) or is this a cunning plan!?

B) The HMRC collection offices - these are the guys and gals who collect the tax and have to agree to any time to pay programme (click the link to our TTP guide page). Many of these offices are short staffed, so such a scheme being announced could cause these offices chaos.

Dave also said yesterday that companies employing fewer than 5 people could also see a reduction in NIC payments. Great, so many SME's will get 1% off this payment. He said this will allow them to pay higher interest charges (tut tut those naughty banks!).

Again a good idea but fraught with problems. Will it make SME's think twice about growing? I suppose not for a few hundred quid a year. Will it actually cost them time and therefore negate savings?

May I suggest instead of tinkering with tiny tax and NIC rates, a much more sensible idea to help new companies and fast growth companies is ZERO CORPORATION TAX for two years.

Plus if the Tories get back in power they should reinstate the 10% Capital Gains tax for entrepreneurs, after Gordon /Ali pushed it to 18%.

Entrepreneurs are much better at creating real jobs, so encourage them!

I suppose the good news is the SME's now look like being on the political agenda and being recognised as an important constituent in the next election.


Please let me know if you are experiencing any pressure from banks to reduce facilities.

When I was on leave last week the Government started to nationalise RBS, HBOS, LTSB and Barclays - this is an amazing turn of events almost unprecedented in modern times.

And I read that they want the banks to lend to SME's at the same levels as before. So how will they go about that then? Sit on lending and investment committees? Sit on risk and underwriting panels? Make lending decisions when they have little or no competence in setting and running budgets even when they have guaranteed income from taxation (unlike SME's)?

Well this will be interesting!

Monday, 13 October 2008

Market Mayhem or recovery underway? Keith's predictions

Well after a weekend to consider the events of this week will it be a rotten day on the debt and stock markets on Monday 13th?

I make a prediction here, I WON'T CARE as I will be sitting beside a pool with a few cold beers, then a few glasses fo Rioja over a nice meal at night. Yes I predict I will be in the Costa Del Sol.

Hope you have a good week. If anything very urgnet please email me or text/call mobile. Otherwise call Iain Campbell on 01289 309431 or 07717 860704.


Thursday, 9 October 2008

Hope this is NOT a sign of things to come

Peter Turner from the FD Centre (our good colleagues across the UK) has just told me that 3 of their clients have had a letter from their banks giving between 1 and 3 months to clear the overdraft. " We don't want exposure to your company/sector" seems to be the language used.

Brilliant, amidst the worst financial crisis for 70 years where are these people going to find a replacement bank facility?

Frankly, as yet we have not seen many such instances, as most banks are applying facility limits aggressively but not pulling the facility.

This call from Peter is eerily reminiscent of 1991-2. God forbid the banks panic and hit the business sector like that awful period.

Tuesday, 7 October 2008

So Iceland banks are going down, my prediction was close.

Another Monday another deeper crisis, or chaos to be more accurate.

Remember chaos theory? Well someone needs to try and work out the chaos theory here and NOW would be good, give the hapless politicians and bankers a steer and hopefully we can come out the other side.

But of course nobody truly knows now what is going on.

"Astonishing" is a well hackneyed word, at this moment it seems a trifle underwhelming.

Each day brings news of bigger and wilder speculation, more fear and collapse.

Time for cool heads at international and governmental level. Will the UK Governments announcement at its pre 8am, 8th October press conference, be a big step forward or back.

My prediction is the Bank and government will collectively say the following......

1). All retail saving deposits will be GUARANTEED for 24 months.

2). 1% off base rates to bring down LIBOR.

3). RBS will get partly nationalised.

4). Bank of England will increase SLS scheme and liquidity for banks beyond overnight (ie underpin 3 month money) and buy toxic assets from all UK banks.

The hope being that "runs" on banks slow and stop. The hope being that Icesave's failure is not a forerunner of UK bank runs. The hope being that credit markets ease and banks lend once again.

If you are a small business; read my earlier blogs; get your tin hats on and focus on YOUR business not this huge global theatre.


Friday, 3 October 2008

Money's too tight to mention (apologies to Simply Red)

On my journey around the UK over the last 10 days I have met potential new clients, existing clients, venture capital investors, suppliers and others. I have been to see good, viable, companies in Glasgow, London, Heathrow, Bath, Blackburn and many more online.

Without exception the common complaint is the financial markets are having an impact on their business. Banks are TIGHTENING credit lines, not reducing at this stage, just applying the terms of the facilities to the letter. Even small breaches of overdrafts lead to bounced cheques, rejected standing orders and rejected direct debit payments.

Yesterday, the Bank of England reported that lenders PLAN to reduce the amount of credit they extend to both businesses and consumers in the coming months. Worryingly this survey was taken BEFORE the recent spectacular crashing and burning of some lenders.

So if they were planning to tighten credit then, what is their likely plan now?

See the full article here...

Tightening the screw on businesses? Whatever next, a sharp rise in insolvencies for businesses?

I do hope that common sense prevails, in the recession of 1991 many good, viable businesses went to the wall due to over zealous (or simply over-run by volume) risk managers knocking SME's over.

Why should SME's be bashed because the bank's capital has been depleted by bad management and poor risk assessment?

Ok. we can complain all we like about the injustice, but we really listen to the message! The message published loud and clear by UK's banks is get a strong survival business plan drawn up, sharply cut costs, produce up to date management information / accounts and be ready for the time you pull on the tin hat.

Only the well prepared and determined will survive this major business crisis in 2008-2009.

Tuesday, 30 September 2008

Wrong, it got worse

Paulson plan, got rejected.

I agree with the doubters, let the shit hit the fan. If your SME company had troubles would you expect to get a bail out from Hank Paulson. Gordon Brown et al?

Er no don't think so?

Monday, 29 September 2008

Well that was the day that was, or was it?

Can this get any worse?

Astonishingly the list of failed banking establishments gets bigger by day, Robert Peston lists them on his blog (see link to the right). We have not seen the like before, Unfortunately I am old enough to have witnessed 3 previous recessions, but this is a different animal.

John Moulton says watch out SME's we are IN RECESSION now.

But hey what's Keith's latest (probably wrong) prediction I hear you say?

Well I am not a short seller, don't have the master of the universe credentials for that, but having seen some strikingly bad balance sheets very recently in the retail sector, I think two banks especially stand out for a BIG FALL.

Kaupthing and Landsbanki, heard of them? Well they own a lot of UK businesses and another investment company Baugur in particular is heavy on retail in the UK. Some of their investments have started to smell a bit recently. You know what I say, "if it smells it's usually off"!

Just how a small country a bit bigger the Isle of Wight, in the North Atlantic has banks that own half of the names on your street is beyond me coz I is thick. But these two banks have so many fingers in pies that they must have problems brewing.

Not that we want to see more failures in the banking sector, do we? But interestingly today the Icelandic central bank /Government rescued Glitnir its THIRD largest bank, which has failed today. Who is next?


PS got a LLP CVA approved today. No creditors turned up, 100% of creditors that voted, voted in favour. More of this when I get time.

PPS used to sell Masters of the Universe toys (made by Mattel), guess they were smarter than some of the numpties who came up with 125% mortgages based upon 6-8 times earnings?

Friday, 26 September 2008

Keith and the London Cabby's tips for retailer failures

Black cab drivers in London are quite good sources of gossip. Last year one told me "Lehman Bros is in trouble". I had a geezer in the cab last night saying watch out for a big problem with Lehman". That was 9 months before it failed.

"What's your game then Guv"? Said one avuncular cabby this week, "turnaround and insolvency" says I. "Oh you mean like that Harvey-Jones geezer"?

Once we had the usual FAQ, he said he felt that soon real-world companies would start falling over and he was sure retailers were next after banks, builders and estate agents.

"So mate, who do you think will be the next big name failures"?

As per my August post re MFI I said that we felt MFI was close to tipping point. I also stated that we thought Mike Ashley's Sports World was a prime failure target. So he, not unreasonably said "why"?

The stores are full of rubbish stock, poorly designed layout's, untrained staff, lots of sale items, big rents and the whole shebang strikes me as totally unprofessional retailing. Oh and no-one gets to know what's going on coz Mr Ashely doesn't like the city. That was my little rant, every time I have been into one of those stores I have left disgusted and, as a former retailer, wondering how it manages to make money.

Today Deloitte announced that they had qualified the accounts of JJB Sports and it felt the company was in breach of its bank covenants. That looks a similar organisation, indeed a better run company altogether. So will I be right about Sports World and Mr Ashley?

The cabby didn't think so, but he was wearing a cheap Arsenal shirt, need I say more?

Thursday, 25 September 2008

Goldrush, greed and fear

What if there was no bail out?

Assume bail outs stop, as they should in a capitalist market, Paulson plan will be followed by Brown plan, Sarkozy plan, Eire plan, Spain plan, UBS (Switzerland) plan....etc if they don't

Half the at-risk banks go, so we will end up with even bigger super banks, is that good for the "market"? Probably not.

So opportunity presents itself to any concert party of rich VC's, investors (corporate or private) local high net worth people, respected business people and others to provide sensible products at good margins to desperate business borrowers.

Mark my words you will see small "banks" bursting out in 2009-2012. They will take assignment of debtors (factoring), offer small loans (perhaps SFLGS?) Possibly taking small stakes in their clients as well. And why not.

Good banking and careful lending is hardly rocket science. Current technology will provide scaleable platforms for growth and by-pass big clearing bank legacy platforms; ever tried to use on-line banking with some of the big 4 machines?

I said months ago money is too cheap now, in future there will be no such things as free business banking, personal banking etc.

This observation is the economist in me, somehow I doubt the politicians are brave enough to let the cycle renew.

If we are to avoid "socialist capitalism" i.e little choice for customers, they must.


Wednesday, 24 September 2008

Easy to understand guide to Fixed and Floating Charges!

First an admission the title is a bit misleading as the whole subject of security charge is complex!
I have written this guide to give a basic understanding of the types of charges and a worked example of liquidation will hopefully illustrate it for you.

When a company borrows money the lender usually takes some “security” for that debt, this is designed to protect the lender’s position and also to try and get their money back if the borrower fails.


The bank or lender may have provided money to acquire an asset like a building, printing press, car, etc. The company cannot sell this without the lender’s permission. The debt must be repaid as per the loan agreement or facility letter.

Think of a mortgage, you borrow money to buy a house, you cannot own the house outright until the debt is repaid, nor can you sell it without the lenders permission. The mortgage is a form of fixed charge.

Another example is an assignment of a company’s debtor book (factoring or invoice discounting). This means the bank buys the outstanding invoices and lends money against them. The debtor book is then subject to a FIXED charge. In effect the book debts belong to the bank or factoring company, NOT the company.


Where a lender cannot obtain a FIXED charge it will take a general or floating charge against the company’s remaining assets. These may include

  • Stock, finished or raw material
  • Work in progress
  • Unfactored debtors
  • Fixtures and fittings
  • Cash
  • Vehicles or assets not subject to fixed charges

If you think about it these are things that the company uses to generate business and trade, it would not be practical to stick a fixed charge over every item of stock or desks and chairs.

What is a Debenture?

This is the document that sets out the FIXED and FLOATING charges and the attached terms and conditions. When signed by the company the lender sends a form to Companies House to register that charge. This prevents other people getting security against the assets in question, unless a Deed of Priority is created (see below).

What happens if a company goes bust?

This is where things get a bit more complex! Instead of theory here is a simple example.

Suppose a software company has a debtor book of £350,000 against which Royal Bank has provided factoring facility of £250,000 and an overdraft of £20,000. It has £50,000 of fixed assets and 15 people.

It owes £100,000 to tax and trade creditors.

It loses a big client and enters liquidation. The debtor book would be collected (usually by lender and directors who have provided personal guarantees). BUT debtors don’t always get recovered in full of course!

After insolvency costs, a total of £200,000 is collected in from debtors. The business is sold to a buyer for £30,000 “goodwill” and £25,000 for the assets like work in progress, PC’s, equipment etc but not debtors.

So a total of £255,000 is available.

The bank as a FIXED and FLOATING charge holder would be paid out as follows; Debtor proceeds of £200,000 go to pay fixed charge. The Goodwill element is also a fixed charge collection and is paid to the bank as well.

So the bank has a shortfall of £20,000 on the fixed charge.

There are arrears of staff salaries and holiday pay of £20,000. That is paid next, to the ex-staff from the £25,000 received for the assets.

That leaves £5,000 available for the bank under the floating charge collection. It is still owed £20,000 under the fixed charge and also the overdraft of £20,000 remains.

In this very simple example the bank would lose £40,000. The preferential (staff) creditors are paid in full and unsecured creditors get nothing.

Insolvency ranking - prefer to see a picture flowchart (click here)?

What is a Deed of Priority?

If there are a number of lenders and a number of loans a pecking (ranking) order is drawn up and the Deed lays out the order of priority if a default occurs.

What is a Deed of Postponement?

Often a director will introduce money to a company and the bank will require his loans to be frozen until their debt is serviced and or paid.

So I hope this little guide helps your understanding, suffice to say in practice is much more difficult.

When a bank sees a shortfall looming it will want a practical solution that ensures the best recovery of its debt obviously, but with asset values falling many banks will see losses ahead.

Recruitment Company in Trouble?

We are working with a major UK recruitment company that has over 50 co-owned companies in its group. It has sales of nearly £100m

As well as providing central HR, accountancy/financial reporting, group buying power for stationery, central advertising and robust central IT systems, they can take away the burdens of running a small recruitment company.

Working capital can be made available and or they will buy a stake in the company.

If you and your team are great consultants and sales people but have a problem with admin and cashflow, call me now on 07974 086779 to discuss your business issues and what my affiliate can provide.

Tuesday, 23 September 2008

What is an "Overdrawn Directors' Current Account"? What can we do to fix this?

A very common problem, created by accountants telling directors how to mitigate tax!

Efficient and correct in times of plenty for a company, this approach can really bite back when losses pile up and that's when the trouble starts.

Usually the company is making some good profits and the external /tax accountants advise directors /shareholders to mitigate tax by paying your directors a small salary and to take dividends from the reserves of profits made in the past and current years.

So off you go taking money out of the business as instructed. At the end of the year a "tallying" takes place. Of course under Self Assessment the individual receiving dividends must account for this income and pay tax the following year.

THEN something goes wrong!

Although the advice is generally sound, from a tax reduction perspective, when a company is performing well; it’s when things go wrong that directors /shareholders can end up with serious personal liability problems.

Having an overdrawn director’s current account is actually a breach of the Companies Act 1985. All accounts filed at Companies House should refer to any Overdrawn Current accounts as loans to the director concerned.

You must try to get these paid back or reversed in subsequent periods as the Revenue will tax you on a fairly penal rate if you do not, (S419 ICTA 1988).

If the company has no distributable reserves, it cannot pay dividends. So if your company’s balance sheet starts a year with nil or negative reserves , then if you make no profit you MUST STOP taking dividends as soon as you are aware of this.

It is much better to pay yourselves through PAYE and pay the tax/NIC. If the company cannot afford to pay you GROSS then it is pretty much insolvent. Questions need to be asked about viability too.


Well options include:

Repay the debt you personally owe to the company.

Offset any loans the directors have made to the company (this is called set off).

Take your full salary but reduce the cash you take out of the business to gradually offset the account. So pay yourself £4,000 per month but take £1,000. Remember to pay tax on the £4,000!

Make a lot of profits in future periods to offset it!

Use a Company Voluntary Arrangement to reverse the account through the PAYE Scheme. (We are experts at this - want to know how to fix the problems your company faces (see CVA - the best rescue mechanism).

What happens in liquidation if we have overdrawn current accounts?

In liquidation the liquidator can demand that directors repay their overdrawn directors current account to the company for the benefit of the creditors. They can take legal action to make directors pay this or even make you bankrupt.

So you could lose your house if your directors’ current account is overdrawn and not recovered.

Take advice from good insolvency practitioners or from KSA.

Thursday, 18 September 2008

What a week!

So since my last Blog entry 10th Sept. (sorry been busy) we have seen cataclysmic events in the banking sector.

Lehman Bros, HBOS, Merrill Lynch, AIG, all effectively bust.

When asked if he thought any other big banks would fail/be gobbled up or merge a banking expert said last night "I don't know its only Wednesday"!

The stench of fear is driving things now, I have been predicting crisis for months, but I am frankly stunned at the names that are toppling over. Where will it end?

For SME business people (my client base) I am predicting the following

  • Less credit availability
  • More expensive credit
  • Many will fail because their banks have lost control and pull in lending to SME's

In the last 12 months we have been warning business people to cut costs, cut costs and cut costs. Manage cashflow daily, make sure your debtors pay on time. Boy at times I thought we were barking up the wrong tree, seems not.


Wednesday, 10 September 2008

Recession for manufacturers time to get the tin hats on too.

Lots of manufacturers came to us in 2001-2004 and most of our work seemed to be in that sector. Recent times have seen far fewer manufacturers in trouble but it looks like another difficult period ahead for the sector.

These days manufacturers are lean, mean and careful with costs, there is generally no more fat to trim so what tools are available to survive this downturn? Here are a few ideas.

  1. Work with the banks early if problems are looming. I think the business banking sector has support teams that are much better structured than even 2004. If covenants could be breached in the next 12 months get talking to your bank now.
  2. Consider insuring your debtor book. Yes this puts costs up but could save you a big bad debt in the next 12 months and therefore save you from insolvency. If you factor or invoice discount ask your lender about their products.
  3. Invest in a good credit checking tool. Check out people you are dealing with!
  4. Consider short time and lay offs. Better to do this than redundancies if possible. If not possible then start consulting about redundancies sooner not later.
  5. Refinance equipment to generate cash and or seek a capital repayment holiday with current asset based lenders (ABL), no one wants to lose your business and a 6 month holiday now could be the fillip your cashflow needs.
  6. Get your business plan out, dust it off and compare where you planned to be to today's reality. Set out strategies for sales, costs and marketing.Not got a business plan? Well time now to set one out!
  7. A oft repeated but good KSA tip, control your cashflow daily!
  8. Got good financial information? Great your are well set to react to difficult times. Not got a monthly profit and loss, cashflow forecast and meaningful balance sheet at the touch of a mouse? Get proper accounting support FAST. One of the most common things I see is poor accounting data. How can you run a business without it?
  10. Get advice and or take counsel from mentors, colleagues, friends. "A problem shared"... as they say.


Tuesday, 9 September 2008

Cashflow problems abound

Getting paid by our 25 odd clients has been tough going in the last month! Since late July we have heard the same replies to our questions from companies across a diverse range of sectors and business types.

"Customers not paying us, we are chasing them hard."

"Cheque bounced from a customer, we are really struggling for cash".

"Our clients signed the order, have had the invoices, but payments dead slow or stop"

"Our factoring company is disallowing more and more of our debtors for age and concentration"!

So whats going on out there?

If our small firm has 25 people saying broadly the same thing (yes their businesses are all insolvent but all creditors payments have been frozen!) then my belief is across the UK, debtor days are rising.

End in sight to the credit crunch, don't bet on it! SME businesses are reporting cashflow problems to us across the board, Banks are being cautious but not withdrawing facilities, just applying covenants and making sure companies are watched.

We will see more pressure between now and January, in particular, on debtor days.

My advice to people is to use credit checking carefully, know who you are dealing with, use a tool like Risk Disk or Creditsafe UK to assess risk, both are inexpensive. Don't give slow payers more credit!

When a customer does not pay on time, the boss should get on the phone to the customer's boss and chase it hard. Don't let their cashflow bring yours down!

Wednesday, 3 September 2008

Stamp Duty uncertainty ends?

Well my post on 28th August was being listened to by Mr Brown? Perhaps not!

Anyway the decision to kill off the stamp duty speculation with a small sop for first time buyers or people buying houses below £175,000 should be welcomed by my clients and other agencies. However, the press have jumped on this saying it wont make any difference! I think at least it clears the air re will he won't he cut stamp duty. As a buyer you might think that this removes a further element of uncertainty.

Price falls will be the key determining factor though for many buyers - will prices fall or rise? My money is on a 25% fall between now and 2010, that would be bad news if your plan is to sell and downsize, but for many people trading up it actually helps them.

The stamp duty holiday demonstrates that the Brown government has a paucity of tools or money available to fix the market. Looks like the market will have to adopt and adapt and fix itself.

My clients tell me that business was slightly better before this announcement, time will tell whether it makes any real difference.

Thursday, 28 August 2008

How to fix the property market - according to our clients

We are working with 3 mid sized regional estate agency groups from the midlands to the South-East.

All have suffered massive drops in sales transactions and all have engaged KSA to assist with cost cutting, reduction of employee numbers and reorganisation of debts using company voluntary arrangements.

I have spoken to all three today and yesterday and some interesting issues have popped out of these discussions

1. All are seeing demand for property rising slightly.

2 All have seen more sales agreed in August compared to previous months.

3. All have seen most of these sales fall through for three main reasons; worries that stamp duty will be suspended, "gazundering" and the withdrawal of mortgage offers at the last minute.

So how would they fix the market is the question we have asked all of them.

  • Get the "cretinous" government to make a decision on Stamp duty, suspension or continuation doesn't matter which. JUST DECIDE. People will hold back if there is a chance of not paying tax!
  • Remove the requirement for HIPS, this was a disaster waiting to happen. All it has done is create jobs for civil servants and consultants.
  • Provide some succour to the mortgage lenders with an extension of the £50bn BOE mortgage rescue facilities.
  • And of course CUT interest rates.

Frankly I don't think all of these are likely to happen as the political pressure on the government would be huge.

Also in my opinion why should the tax payer bail out the home market?

We need to see a recovery in savings and a period of austerity. I remember having to wait 6 months for a mortgage on my first property which cost £16,000, then I had to pay my wages into the Universal Building Society and hope that the manager Mr Davidson would let me have a mortgage based upon my savings. I had to provide a 30% deposit in 1980.

I suspect we will see more banks and building societies applying a similarly careful approach in future ?

Tuesday, 19 August 2008

Top ten tips to help your company survive a recession

Recession is coming we can help your company survive!
  1. Set out a simple strategy for survival. A one or two page business plan will help guide you through. If you already have a detailed business plan, dust it down, and add the new short term survival strategy to it. How does that impact upon the older plan, the business and the way you go about business?
  2. Follow our cost cutting guide, there are always more ways to cut costs. If you need to cut people costs, make sure that you follow correct procedures.
  3. Check your cashflow DAILY, we can provide a free cash flow model by return simply email Don't bounce cheques, be in control of your bank account.
  4. Don't stop marketing, but review all expenditure. Does old fashioned ink and paper advertising actually bring in revenues? Be honest, if it doesn't, then stop all printed advertising. Consider, Google Adwords programmes. A modest spend can bring targeted customers (Google may have brought you to this page!) If you don't know how by "Adwords for Dummies"!
  5. Call all of your customers and ask how business is for them: this will benefit you in several ways. You may sell them something new or extra. You may find out that they are in deep trouble, so beware of supplying. You may learn more about the impact of the credit crunch on their business and how may that impact on your business. So you can then adjust your plans (see tip 1). Knowledge is king in difficult times.
  6. Review prices, can you increase your prices? Can you cut suppliers costs by paying faster or earning "settlement discounts". Can you buy larger quantities at better prices, can your business help their business survive. Talk to them! Ask accountants if you can spread payments for their fees monthly. All helps cashflow.
  7. Make sure that your debtor collection is spot on. I know a plumber that issues his invoices once a quarter!! Make sure you issue your invoices EVERY DAY. Make sure that you have a strong debtor collection policy, no payment after 90 days should lead to no further supplies to your customer. Yes I know its a fine line but if your customer does not pay there is no point in sending more invoices is there? See our fuller guide here
  8. If you use factoring only draw down one a week at most. Every time to draw down costs you money. Daily drawdowns can cost £000's over a year. So if you use your daily cashflow model you should be able to control cash such that you draw down cash Mondays, issue cheques and BACS on Tuesdays and issue new invoices every day if you can. This will save you hundreds of £'s this month.
  9. If you cannot pay arrears of PAYE and or VAT, you can obtain 6-12 months form HMRC to spread the payments out. if you don't know where to start use our programmes at our shop. Spend £87 to get 12 months to spread £000,'s of tax payments until 2009!
  10. Make sure that all of your people know that times are going to be difficult and the team must work extra hard to survive the downturn.

So there you go CompanyRescue's top ten tips to survive a recession. If you need additional help we are always here to answer questions or give guidance. Call 0800 9700 539 (free from landlines).

Monday, 18 August 2008

KSA is hiring, we need good people!

Full Time Insolvency & Corporate Advice Administrator Required

Closing Date 8th September 2008

Based in our Berwick office some London work may be required.

Accounting, credit control experience required, along with mature telecoms skills. You will be efficient, a self-starter, organised & conversant with Office, Outlook, e-mail, internet & office systems.
Insolvency CVA / liquidation /IVA experience will be advantageous!

KSA operates from Berwick & London offices providing CompanyRescue advice to struggling companies. Interesting work, fast growing, lively company. Starting salary scale of £17-20k plus annual bonuses to reflect your ability and experience.

E-mail or write to Keith Steven (Director) attaching your CV and why you want to work with KSA.

KSA (NE) Ltd, Units 7 & 8 The Chandlery, Berwick, TD15 1HE; Floor 6 Tower 42, 25 Old Broad Street, London, EC2N 1HN

Recession in UK is months away

Recession in UK 'is months away' is the big news headline today, with a change of view from British Chambers of Commerce, their news releases has been picked up by most of the media.

BCC now predicts a UK recession, 250-300,000 job losses and no recovery for at least 2 years.

Frankly, it is not really news anymore as anyone who reads the press, listens to the news and works in SME business will know, this has been discussed for some months now.

What's new? The fact that many august organisations like British Chambers of Commerce are now having to redraw their forecasts and withdraw some of their commentary, replacing it with less optimistic and rosy rhetoric now.

Economists like Ambrose Evans-Pritchard, Tim Congdon and others have been forecasting recession for some months. Indeed Evans-Pritchard reporting on the Budget on 13th March 2008 in the "Daily Telegraph" said:

"Britain is at risk; it duplicated the USA bubble and must suffer the same fate. The UK is merely 9 months behind. America tipped last autumn - Britain will tip this summer". By tip he means Britain will start to tip into negative growth by summer 2008. At that time he was shouted down by scores of people, BCC were like Mr Darling, forecasting 2.5% growth then. What price their scorn now?

I have been using a very long email signature at the end of each email message for 6 months now. In it I say cut costs NOW and preserve cashflow NOW. BCC are now effectively joining this siren call in warning for recession and 300,000 jobs being lost in the next 18-24 months.

This would suggest that their economists see difficult times ahead for the SME sector until late 2010.

What can SME's do now? I keep going back to my email signature, get ready now if you have not already. Cut costs, reduce overheads, try to increase prices and margins, manage your cashflow daily, oh and get the tin hat on.

Economists are saying we are going to have 24 months or longer of stagnation, then recession, then stagnation then slow growth maybe starting early 2011.

Friday, 15 August 2008

Limited Liability Partnerships; we are working with a number of LLP's to help them restructure. In one case a firm of solicitors with very high levels of bank debt approached us to see if a company voluntary arrangement for a LLP was possible.

Our normal policy is to go through all options for our prospective clients, we compare the advantages and disadvantages of administration, CVA, liquidation, receivership and so on. Then its a process of elimination and pick the most appropriate option - CVA of course!

In a law firm's case if it was to enter administration or receivership then under Regulation 8.2 of the Solicitors Recognised Bodies Regulations 2007, recognition of the solicitors will automatically expire if a winding-up order or administration order is granted under Part II of the Insolvency Act 1986, or a resolution is passed for voluntary winding-up, or an administrative receiver is appointed, in respect of a recognised body.

What does that mean in plain English?

Well simply the firm would lose all of its clients because the Solicitors Regulation Authority would remove the legal work and clients from the company to protect their interests, upon the granting of an administration order. In lay terms a SRA hit squad would arrive and remove all of the files and take control of the trust accounts etc.

So we suggested that a CVA was in the best interests of the bank, the unsecured tax and trade creditors and staff. Although an annual assessment of the members (lawyers) will be carried out by the SRA, the CVA does not lead to automatic breach and loss of the solicitors ability to practice.

Thus our CVA process will lead to an orderly reduction in bank debt, around 50p in £1 for tax, trade and VAT creditors and retention of around 60 jobs in this case.
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