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Signs a Company is Heading Towards insolvency


Posted on 15 June 2016

With high profile businesses such as BHS and Austin Reed going into administration in the space of two days last month, the process of managing insolvent companies has once again been brought into the spotlight.

Despite these high-profile failures, administrators have found themselves dealing with the lowest levels of corporate collapses for seven years.

In the first three months of 2016 3,694 companies in total in England and Wales became insolvent, according to the Insolvency Service. That was a slight increase on the previous quarter, but fewer than in the same period in 2015 and some 42 per cent down on the first quarter of 2009, when the financial crisis was taking its toll.

But what are the warning signs that a company is heading towards insolvency?

  1. Payment terms are consistently not being met.
  2. There is a marked slowdown in the progress of work and a general decrease in the amount of staff present on site.
  3. Quality of work decreases.
  4. It is becoming increasingly more difficult to pay staff wages.
  5. There are no systems in place to check debtors’ payments coming in.
  6. The company is making redundancies.
  7. The employees seem disengaged.
  8. There seems to be a general lack of organisation within the company.

These signs may not always indicate potential insolvency but they could point to some issues within the company structure.

If you are experiencing one or more of the above signs or recognise these in a company you are dealing with and wish to speak to one of our team of experts please get in touch. 

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