Following every bad debt or loss due to insolvency the directors, suppliers, customers and employees almost always ask themselves "Could we have seen it coming?  Could we have predicted the company was in trouble? What were the distress signs that we missed?."

Well, here are the top six signs of company distress I look out for... There are no real surprises other than how so many of these clear warning signs are no acted upon.

1/. Financial Statements including Management Accounts

Not understanding, or not accurately preparing, financial statements. 

A sports team would not compete without a precise way of keeping score.  But, incredibly, many troubled companies operate without having accurate financial statements that the owner fully understands.

Understanding that when cash payments exceed cash income there is a negative position and if it continues to be negative the company will become illiquid. Without new capital from equity investors or lenders a company can quickly find itself in serious financial straits.

UK Construction companies could be facing cashflow problems in the near future thanks to the dramatic increase in building material costs, and the introduction of the VAT Reverse Charge Scheme on 1 March 2021. Statistics released by the Department for Business, Energy and Industrial Strategy last week show that the cost of construction building mat...