How do I know if my employer is in financial difficulties?
This is a difficult question to answer since there are many factors that determine the financial stability of a business and whether it will ultimately fail.
There are sources of information regarding companies, the most obvious one being Companies House. Companies House makes available to the public the audited accounts of limited companies (for a fee).
Companies House may be of limited assistance since if the company has been recently formed no accounts may have been prepared and even if they have, the accounts are not published on Companies House until some time after the relevant period. Therefore without full access to the financial systems and reports prepared by management it is often difficult to establish a business’ true position.
There are some warning signs that an employee could look out for but these are often only apparent in the late stages of financial difficulty.
Possible signs:
Increased number of ‘suits’ attending site;
Increased number of director and senior management meetings;
The funders of the business undertaking a unscheduled audit or review;
The auditors of the business attending the site at an unusual time of year;
A party touring the site and listing items of equipment (e.g. under the guise of an insurance review);
The business being placed on the market for sale;
Suppliers withdrawing credit – requesting payment up front;
The business increasingly being placed on stop by suppliers;
The stock levels decreasing significantly;
Suppliers attending site to remove goods, e.g. raw materials, leased cars, etc;
Bailiffs attending site to schedule or remove items;
Late payment of expenses, etc;
Late payment of wages;
Failure, financial difficulty or loss of a key customer; and
An attempt to reduce the benefits of a final salary pension.
It also be borne in mind that there may be justifiable reasons for these symptoms and sometimes businesses do experience short term or unexpected problems. Therefore these symptoms may not actually be a result of financial difficulties.
