Company Number: 13970060

Analysis Date: 2025-07-20 14:39 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   7HA RECORDS LIMITED is an active private limited company operating in the artistic creation sector. The company is very young (incorporated in 2022) and currently has limited financial history. Its latest accounts show a significant drop in net current assets from £28,030 in 2023 to just £102 in 2024, mainly due to reduced cash and increased current liabilities, which raises concerns about short-term liquidity and working capital management. However, the company remains solvent with shareholders’ funds positive, and there are no indications of insolvency or adverse director conduct. Credit approval could be considered with conditions such as regular financial monitoring, clear visibility on cash flow generation, and possibly limits on exposure until financial stability is demonstrated.

2. Financial Strength:
   The balance sheet shows very low net current assets (£102) at 31 March 2024 compared to £28,030 in the previous year. The company’s current assets decreased from £66,079 to £27,298, driven by a sharp reduction in cash from £65,400 to £20,088. Current liabilities remain high at £27,196, composed mainly of other creditors (£26,083) and trade creditors (£1,073). The company has no fixed assets disclosed, and equity remains minimal (£102) but positive. The decline in net assets and working capital signals weakening financial strength and potentially aggressive creditor terms or delayed payments from debtors.

3. Cash Flow Assessment:
   Cash at bank is £20,088, which is modest and may be insufficient to cover current liabilities of £27,196 if creditors demand immediate payment. Debtors increased to £7,210, but this is a relatively small amount and may not be quickly realizable. There is no indication of long-term borrowing or overdrafts, which limits financial flexibility. The company's liquidity position is tight, and working capital is almost neutral, which could constrain operational resilience. Close attention to cash flow forecasting and debtor collection will be essential.

4. Monitoring Points:

• Monthly cash flow statements and debtor aging reports to ensure liquidity is maintained.
• Timely payment of trade and other creditors to avoid penalties or supplier issues.
• Quarterly reviews of net current assets and shareholders’ funds to detect any further deterioration.
• Confirmation of turnover and profitability trends to assess if the company can improve cash generation.
• Director’s engagement and any changes in control or business strategy that could impact credit risk.