Cash taking longer to collect, pressure on borrowing limits, suppliers tightening terms, overdue statutory payments and unreliable management information can all warrant prompt attention. A single missed payment or sudden loss of funding may be serious even without a sustained pattern. Assess the amount, timing, available cash and obligations falling due rather than assuming one difficult month is ordinary trading.
Start with reliable information
The first step is usually a reliable picture of the current position. A short-term cash flow forecast, built from the bank balance and tested against actual results, shows how much time the company has. Reconciled figures also matter, because lenders, creditors and advisers will test the same information before responding.
Options narrow over time
Many responses are informal, such as renegotiating payment terms, reducing costs or releasing working capital. The Companies Act 2016 also provides formal routes, including a scheme of arrangement, a corporate voluntary arrangement and judicial management, and the Companies (Amendment) Act 2024 amended these rescue provisions. SSM publishes the Act and its amending legislation on its Companies Act 2016 page. Each route has its own conditions, and some depend on the business still being viable, so acting early tends to keep more options open. Our article comparing corporate rescue mechanisms gives an overview, and our article on liquidation and insolvency covers winding up.
The first financial position pack
Use a common information date and assemble reconciled bank balances, a short cash forecast, aged receivables and payables, a borrowing and security schedule, and material commitments or disputed liabilities. Show which figures are verified, estimated or awaiting evidence. Include the assumptions behind expected collections and payment dates.
Identify immediate cash gaps and decisions requiring specialist advice. Give each missing record an owner, but do not wait for a complete pack before seeking advice about an urgent demand or inability to meet a payment. Legal rights, creditor priorities and formal rescue or insolvency appointments require appropriately authorised advisers and office-holders.
This article is general information only. Requirements depend on each company's circumstances; please refer to the official legislation published by SSM, and see Saifudin & Co's corporate restructuring and recovery services for financial-information, cash-flow and reporting support.