How do I stay of the top of money owed to my business as the economy takes a downturn?

The main purpose of any business is to make a profit. In any downturn as work becomes scarcer, there is a temptation to lower the price you charge in order to maximise your share of the dwindling demand. This can become a race to the bottom; you need to consider whether you are competing on the right basis, especially for a long-term sustainable business.

As Aldo Gucci, the fashion designer said: “Quality is remembered long after the price is forgotten.”

You need to reframe your business so that you are concentrating on providing a quality service with value-added and not just a cheap, lowest price wins offering. Otherwise, longer-term, you are more and more susceptible to minuscule changes in the market.

As we look into the future, the next 3-6 months seems very uncertain for many of us, and many businesses have gone into survival mode as they try to prepare themselves for the storm which has for the first time affected the global economy worldwide almost instantaneously.

Longer-term advice includes ensuring you have a proper electronic accounting system – these are so easy to use from anywhere there is no excuse for you now not to have clear records of money you owe and invoices you have outstanding. You should ensure you have terms of business and have agreed when you will be paid for the work done. Finally, know who you are contracting with and understand legal entities such as limited companies and sole traders. We urge you to seek advice if you are unsure as it can be a costly mistake.

Here are my top 10 tips for you in these challenging times to stay on top of your money in the short term:-

  1. Issue the invoice as soon as you have done the work, follow up in the next 24/48 hours with confirmation it has been received and there are no issues being raised with the work.
  2. Produce a weekly aged creditors/receivables report to highlight who owes you money.
  3. From that report, call and follow up by email anyone who is overdue and get a confirmed payment date. If they are having an issue making the payment, try to agree to repayment by instalments.
  4. Contact anyone who is due to pay in the next few days to confirm the date and amount you will be paid.
  5. If an account is in arrears and beyond terms, when calling, always get debtors to take some action – and set a deadline of what has to be done by when.
  6. Where you know you are going to be encountering a cash-flow problem, talk to your suppliers and agree time to pay if necessary.
  7. Keep a close eye on your costs and outgoings to ensure you can maximise the amount of cash you have within the business, try to retain this money where you can for as long as possible.
  8. Remember to thank those who pay you on time, sounds simple and is, but stands you in good stead with the client.
  9. Be persistent but always remain polite, he who shouts loudest often gets paid first!
  10. Take expert advice either when the deadline set by you has passed or where the debtor goes quiet and be prepared to take action.


As debt recovery and insolvency experts, I and my team at Professional Legal Collections are happy to help. We offer a range of specialist services from Credit Control and debtor management, issuing letters before action and the legal process where necessary to get the rightful money paid to you. Contact us for a no-obligation conversation.


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I’m a director of a limited company – can I be pursued personally if it all goes wrong?

I’m a director of a limited company – can I be pursued personally if it all goes wrong?


On Saturday 28 March 2020, the Government announced that they would be modifying the Insolvency Act 1986 to allow businesses breathing space and allow them to continue to trade whilst options for recovery are explored. This is by looking to suspend a director’s personal liability for wrongful trading under that Act, amongst other steps. The detail is not yet known as the legislation has not yet been drafted and passed through Parliament, we understand it will be drafted and passed at the earliest opportunity.


Let’s explore the law as it stands at the moment, we can provide further Covid-19 specific advice as and when the details are released by HM Government.


Firstly, if you are a director of an incorporated company Ltd, PLC or LLP (that is a Private or Public Limited Company or Limited Liability Partnership) then you may think you are personally protected – that’s why you were advised to form the company in the first place, right?


Yes, well your personal liability usually is limited to the paid-up share capital that you may have put in as a shareholder. Directors are not usually personally liable for the acts and omission of the company which is a legal entity in its’ own right.


But, (yes there is a but), in certain circumstances you can be held PERSONALLY liable for the debts of a limited company or partnership. There are a range of circumstances where you will be held liable:


  1. You’ve signed a personal guarantee;
  2. You’ve pledged a person asset as security for a company debt;
  3. You’ve overpaid yourself from the company money and created an overdrawn Director’s Loan Account (DLA);
  4. You’ve paid yourself an illegal dividend from the company as a shareholder, when the company has not made a profit;
  5. You’ve permitted the company to dispose on an asset below its true market value;
  6. You’ve permitted the company to pay a creditor of the business in preference to another and the business is insolvent;
  7. You’ve permitted the company to continue to trade beyond the point that it ought to have known that it was insolvent and past the point of no return;
  8. You’ve misrepresented the facts or fraudulently applied for credit or taken deposits on behalf of the business knowing you would not be able to deliver;
  9. You’ve not acted in the best interests of the business and someone has suffered a loss as a result.


These are dealt with under either the Companies Act 2006 or the Insolvency Act 1986. If you have signed a personal guarantee or pledged a personal asset as security for a company debt or liability then generally you are bound by this and you will be obliged to honour the debt. We urge you to take professional advice before entering into such an agreement and also if you believe you have and you need to explore whether it is valid. There are some legal hurdles which have to be completed so we suggest you contact us to take professional advice on your particular issues today.


Where you have overpaid yourself as the company cannot afford to pay you or where you have paid yourself as shareholder and the company has not made a profit is an area we frequently see company directors falling foul of the law. This is dealt with under Part 23 (sections 829-830) Companies Act 2006.


Where you’ve permitted the company to dispose on an asset below its true market value, this is technically known as a transaction at an undervalue, covered under s238 Insolvency Act. Where the company undertakes a transfer of an asset as a gift or at significantly less than the true value of the item in the time up to 2 years before the company entered into insolvency. The transaction can be reversed by the court and you can be liable for the costs of the court proceedings.

Where you’ve paid one creditor of the company and not paid another this is called a preference payment as where there is an insolvent situation (or you ought to have known there was one) then you can attract personal liability if the transaction occurred within 6 months of the company becoming insolvent, there the party to whom the payment is made is a connected party then the time limit extends to 2 years. When money is tight, and an insolvent situation may occur you should seek professional advice and only pay all creditors on a pari-passu basis. That is in equal amounts as a percentage of the total debt.


Fraudulent or Wrongful trading are covered under sections 213 and 214 Insolvency Act respectively.  The wrongful trading section is likely to be suspended following the Government announcement. Fraudulent trading will more than likely not be as this involves the element of intent. Any person found guilty are liable to make contributions to the companies’ assets as the court thinks proper. This could have a serious and far reaching impact on you as a director, s993 of the Companies Act 2006 was extended by the Fraud Act 2006 to increase the penalty to up to 10 year’s imprisonment.


Where you knew or ought to have known that there was no reasonable prospect that the company would avoid going into insolvent liquidation and you as a director continued to allow the business to trade beyond that point then you can be personally liable for the losses from that point in time. You need to take expert legal advice from us on your position immediately if this is the case.


The final time is known as misfeasance, under s212 Insolvency Act 1986. This is a wide provision and can snare many unsuspecting directors who do not take advice when the business performance downturns and cashflow become tight. The section covers where a director (or former director) has misapplied or retained or become accountable for any money or property of the company.


In summary, the points above can be daunting and scary to the average director who is just trying to earn a living. We strongly recommend that you take expert advice to understand your liability and any downsides to any action you chose to take, it can save you a lot of money, heartache and stress in the future. As we move in very uncertain times, we urge you to make contact with us to ensure you are protected, and your personal position is not put in jeopardy.


The above is intended as a guide to our interpretation of the law and the Government announcements, it is not intended and should not be used in lieu of specific legal advice which we recommend you take before taking any further action.


Sharp rise in County Court Judgments (CCJ) against businesses in Q1/2019

The Registry Trust has released statistics for January to March 2019 which show a 12% increase in County Court Judgments (CCJ) against businesses. 35,779 judgments totalling £107.2m against businesses were registered in that 3-month period. This is a 6% rise from the level in Q1 2018.

The average value of the CCJ’s was £2,997 which is a 5% reduction from the value in Q1 2018.

Mick McAteer, deputy chairman of the Registry Trust commented:

“Business judgment data is an important indicator of the state of the economy. The numbers and value of judgments have risen for the third year in a row. But it is worth noting that these levels are still well below the peaks seen just after the financial crisis in 2009”

Martin Kingman CEO of Professional Legal Collections Limited notes:

“The increase is a worrying trend for UK plc as a whole. Businesses need to ensure that they are protecting themselves and carrying out due diligence before offering lines of credit.”

Our top 5 tips to help you protect your business are:-

1. Ensure you know who it is you are entering into an agreement with;

2. Carry out a credit check to give you a recommended contract limit and overall trading credit limit.

3. Do not offer credit beyond the recommended limit without getting additional security (such a a retention of title clause or personal guarantee in place).

4. Ensure you have up to date and signed terms of business or a bespoke contract in place to offer your business maximum protection.

5. Act quickly if the account goes beyond terms and speak to us as specialists if you are in any doubt about the best steps to take.

FlyBMI enters Administration

Over the past weekend British Midland Regional Limited trading as flybmi entered into administration leaving passengers stranded. It also leaves their 376 employees in jeopardy.

The Brexit uncertainty combined with the rise in fuel and carbon costs have been blamed by the airline who carried 522,000 passengers in 2018 on 29,000 flights.

This is another sad demise which follows the 2017 administration of Monarch.

Q4 2018 Insolvency Statistics

The Insolvency Service has released the Oct-Dec 2018 Insolvency Statistics which showed corporate insolvencies are still on the increase with a small rise of 0.7%, they are now at the highest level seen since 2014 with a total of 16,090 companies being made insolvent.

Worryingly for the economy the sector with the highest number of company insolvencies were in the construction sector which saw 2,954 insolvencies. We anticipate this may increase further over Q1 2019.


But it is the personal insolvency rises which has caused the most alarm, with an increase to levels not seen since 2011 with a total of 115,299 being declared bankrupt a 16.2% increase.

The corporate figures represents 1 in everyone 249 companies being liquidated. If you are a director and your business is struggling early intervention by an Insolvency expert such as ourselves can help preserve the business and obtain the best results for directors, staff and creditors. Call us today.

Small Business Cashflow warning

With the forthcoming suspected interest rate rise, 40% of SME’s admit to having no financial buffer despite having outgoings of over £4k per month.

SME loan approvals has falled from 58% to 43% in the past year. Where SME’s do have something in reserve, the most popular are:-

  • 59% Cash Savings;
  • 34% Property;
  • 23% Overdraft;
  • 20% Plant and Machinery; and
  • 17% Business Credit Card.

More worrying was the fact that 55% of SME’s admit to paying bills late to ease cash flow issues. 21% admit to doing this monthly.

If you have suppliers who are not paying you then you need to get in touch; we can help you recover what you are due.

22 Jun Large rise in judgments in Northern Ireland in Q1 2018.

The total number of defaults and small claims judgments issued in Northern Ireland during the first quarter of the year rose to the highest levels since Q1 2012, according to figures released by the Registry Trust. The Registry Trust is the non-profit organisation which collects judgment information throughout the British Isles and Ireland. In Northern Ireland it collects information on defaults and small claims judgments, and High Court judgments.

An increase in judgments is a warning that debts may be out of control.

There were 2,242 small claims judgments in Q1 2018, 16 percent more than during the same quarter last year and the highest total for any first quarter since 2012.

The average small claims judgment decreased four percent to £1,960; combined these changes led to an 11 percent rise in the total value of small claims judgments.

In the High Court 24 judgments were registered, 21 fewer than during the first quarter of 2017. The average High Court judgment plummeted, dropping 48 percent in value, leading to a 72 percent fall in the total value of judgments.

During Q1 2018, 2.74 percent of judgments were marked as satisfied. This contrasts with 13.14 percent in England and Wales, where satisfaction rates are generally higher owing to differences between legal systems.

Trust chairman Malcolm Hurlston CBE advised people who had paid back: “If you have satisfied a judgment, tell Registry Trust and we shall let credit reference agencies know. Then you are likely to find borrowing easier and cheaper. You need to tell us, it doesn’t happen automatically. Fewer than a quarter of the people in Northern Ireland who pay back are getting the recognition they deserve.”

The Registry Trust received 8,646 requests to search the register for Northern Ireland online at during the first quarter of 2018. TrustOnline allows anyone to search for judgments and similar information registered against consumers and businesses in any jurisdiction across the British Isles and Ireland. “It is a unique benefit for consumers to be able to check the debt record of any person or business with which they may be transacting,” said Mr Hurlston. “I would hesitate before transacting with any business which had a judgment on its record.”

13 Jun Britain’s Largest Manufacturing Fall in 5 years

On 9 June 2018 the Office of National Statistics released their latest figures which showed a worrying fall in UK manufacturing output. In April 2018, UK Manufacturing fell by 1.4% which is the largest fall since the 1.8% contraction experienced in October 2012.

The ONS reported:

    • The three-monthly fall to April 2018 in manufacturing of 0.5% is the largest fall since May 2017, due mainly to decreases in electrical equipment (9.4%), and basic metals and metal products (1.8%).
    • The fall in manufacturing is supported by widespread weakness throughout the sector due to a reduction in the growth rate of both export and domestic turnover.
    • In the three months to April 2018, the Index of Production increased by 0.3% compared with the three months to January 2018, due primarily to a rise of 3.2% in energy supply; this was supported by a rise in mining and quarrying of 4.3%.
    • In April 2018, total production was estimated to have decreased by 0.8% compared with March 2018, led by a fall of 1.4% in manufacturing and supported by falls in energy supply (2.0%), and water and waste (1.8%).
    • The monthly decrease in manufacturing output is the largest fall since October 2012 when it fell by 1.8%; there is widespread weakness with 9 of the 13 sub-sectors decreasing and this is a continuation of the recent slowdown in this sector.
    • In the three months to April 2018, the Index of Production increased by 2.3% compared with the same three months to April 2017, due mainly to a rise of 2.3% in manufacturing.
    • Full report can be found here.

We have highlighted the one month downturn which gets “hidden” in the headline for the three monthly figures. We urge all those who deal with the sector to heed the warning that further uncertainty in both this and the retail sector, on top of the instability already experienced in the Construction Sector earlier this year. The UK economy looks like it could be in for a bumpy ride over the next few years.