Brexit continues to keep the continued poor state of the economy out of the headlines. However, the spectacular collapse of British Steel has brought economics back into stark focus with a bang.
Anybody who has a measure as to financial indicators knows that the liquidation of British Steel was always on the cards. Plus it was always going to be sooner rather than later.
Simple diligence investigations
- Look into the parent company, Greybull’s other purchases shows numerous high profile business failures in recent years. Most notably electrical giant Comet and then Monarch Airlines. All of which ultimately cost the taxpayer a whopping £60m.
- British Steels share price fell a staggering 80% over the last 14 months. An clear indication that experienced traders were pulling their money out, rather than investing in.
- A review of British Steel’s accounts show a cash injection of £154m in the last financial year. Followed by a Government loan to the tune of £120m. All this demonstrates a serious miscalculation in both future trading and the accounting process.
Every business owner whether at the head of large or small company, know it’s still very tough economically. So let’s be frank, it’s never been easy and it never will be. It’s how we educate, identify and manage the financial pressures that counts.
Business hunches are usually correct. If you have doubts about a customer or a supplier, then there are quick and easy ways to determine whether you may have increased exposure or risk.
Take the above examples about British Steel as a guide ;
- Simple checks through Companies House and credit reference agencies will tell you who in fact is behind a company and that they may not be all that they seem.
- Larger businesses with a share issue allows you to review periodic results and ratings, which can provide an indication as to whether a company is on the up or on the slide.
- Most limited companies are forced to file financial accounts that are available to the public. By reviewing these, you can determine how well, or how poorly, a company is being run.
British Steel isn’t the first and it certainly won’t be the last industry giant to fold. What’s important is what we learn from the failure. What indicators we use for the future and how we ensure that we’re not one of those caught up in the ripples of debt that ultimately flow down the supply chain.
How can we help?
To learn more about the benefits and costs involved in outsourcing your credit control to Corporate and Commercial please get in touch. We’re a friendly and professional team who want to help your business succeed. Email firstname.lastname@example.org or Call 01535 654 594