Company Number: OC440271

Analysis Date: 2025-07-20 17:08 UTC

1. Risk Rating: MEDIUM

The company, Collective Shift LLP, demonstrates a stable net asset position with positive net current assets and no overdue filings, which is positive. However, there are several areas of concern related to its solvency and liquidity that warrant caution. The business shows reliance on members' loans, hire purchase liabilities, and a relatively low cash balance, which could impact operational flexibility.

2. Key Concerns:

• Liquidity Risk: Cash on hand is minimal (£127 at year-end 2023), and a large proportion of current assets are in debtors (£74,377). This concentration could pose cash flow timing issues if debtors are not collected promptly.
• Leverage and Long-term Obligations: Significant hire purchase liabilities exist both within one year (£20,936) and beyond one year (£31,548), indicating ongoing financial commitments that reduce financial flexibility.
• Reliance on Members’ Loans: The net assets attributable to members (£58,972) are essentially members' loans, which rank equally with unsecured creditors in insolvency. This reliance could pose solvency risk if external financing or operational cash flows are insufficient to meet liabilities.

3. Positive Indicators:

• No Overdue Filings: The company is compliant with Companies House filing deadlines, indicating good regulatory governance.
• Positive Net Current Assets: At £35,036, net current assets are positive, indicating the company’s current assets exceed current liabilities.
• Stable Net Asset Position: Total assets less current liabilities remain stable around £90k, suggesting a reasonable capital base for a relatively young LLP incorporated in 2021.

4. Due Diligence Notes:

• Investigate the nature and aging of debtors to assess collectability and any risk of impairment.
• Review terms and conditions of hire purchase contracts to understand cash flow impact and potential refinancing risks.
• Examine the company’s cash flow statements and profit and loss accounts (not filed with accounts) to assess operational profitability and cash generation.
• Confirm the nature of members' loans, their repayment terms, and any contingent liabilities.
• Assess any off-balance sheet obligations or guarantees not disclosed in the financial statements.