Financial Health Assessment: Decision Vision Ltd

1. Financial Health Score: D+

Explanation: The patient is in a weakened state. Net assets have turned negative at -£40,280 (deteriorating from +£23,971 in 2023), and the working capital deficit has nearly doubled to -£113,314. While the business is still breathing—maintaining 33 employees and a modest cash balance—the balance sheet shows clear symptoms of financial distress. The heavy reliance on related party debtors and growing creditor pressures suggest the condition requires urgent attention.

2. Key Vital Signs

3. Diagnosis

What the Financial Data Reveals About Business Health

The patient is suffering from a combination of conditions—some chronic, some acute:

🔴 Chronic Condition: Negative Equity Cycle

The company has oscillated between positive and negative net assets multiple times over the past decade (-£34,553 in 2015, -£19,556 in 2016, -£79,403 in 2019, and now -£40,280 in 2024). This pattern suggests a business that survives from contract to contract rather than building sustainable reserves. The dramatic swing in 2018 (net assets of £1.37m) appears to have been an anomaly—possibly a large project or asset revaluation—that has since unwound.

🔴 Acute Condition: Working Capital Crisis

The working capital deficit has nearly doubled from -£64,862 to -£113,314 in a single year. This is the financial equivalent of the circulatory system being unable to deliver oxygen to vital organs. The business is relying on: - Creditor forbearance – Trade creditors have risen 39%, and HMRC liabilities remain high at £190,228 - Related party lending – £48,780 owed to Service Contracts Ltd (notably, this was the company's previous name) - Deferred payment timing – The growing creditor base suggests the business is stretching payment terms

🟡 Complication: Related Party Dependency

The single largest debtor is Point Four Selfserve Limited at £178,169—representing over 56% of total debtors and 45% of current assets. This creates a dangerous concentration risk: - If Point Four Selfserve cannot pay, Decision Vision's liquidity would be devastated - Related party transactions lack the discipline of arm's-length commercial arrangements - The amount has nearly tripled from £61,284 in 2023, suggesting increasing interdependency

🟡 Complication: Deferred Tax Liability

The deferred tax provision of £26,518 (reduced from £42,225) suggests the company has timing differences that may reverse, creating future tax obligations. Combined with the £190,228 in current taxation, the total tax burden is substantial.

🟢 Positive Signs

• Cash improved from £54,143 to £68,992 (27% increase)
• Employee count maintained at 33, suggesting ongoing operational capacity
• Stock reduced from £32,649 to £13,467, indicating better inventory management or clearance
• Fixed asset investment continued – £8,450 in additions to computer equipment
• The business is still actively trading and has survived for 15+ years through multiple financial challenges

4. Prognosis

The outlook is cautiously negative without intervention.

Without corrective action, the company faces a high risk of entering formal insolvency within 12-24 months if: - Creditors (particularly HMRC) demand payment - The related party debtor (Point Four Selfserve) fails to repay - A major contract is lost

However, the business has demonstrated resilience—surviving previous periods of negative equity and continuing to trade. The IT consultancy sector typically has low capital requirements and high margins, which may allow the business to trade through this position if revenue remains strong.

Key risk timeline: - 0-6 months: HMRC may enforce against the £190,228 tax liability - 6-12 months: Bounce Back Loan repayment of £10,000 falls due - 12-24 months: Related party debtor collection becomes critical for liquidity

5. Recommendations

Immediate (0-3 months)

1. 🩺 Collect Related Party Debts Urgently - The £178,169 owed by Point Four Selfserve Limited must be prioritized for collection - Establish a formal repayment schedule with enforceable terms - Consider whether this debt is genuinely recoverable—if not, an impairment must be recognised, which would further erode net assets

2. 💊 Negotiate with HMRC - With £190,228 in taxation and social security liabilities, proactively engage with HMRC regarding a Time to Pay arrangement - HMRC is generally more amenable to arrangements if approached before enforcement action

3. 🩹 Review Creditor Payment Priorities - The £181,481 in trade creditors suggests suppliers are being stretched—this risks supply chain disruption - Prioritise critical suppliers to maintain operational continuity

Short-term (3-6 months)

4. 💉 Improve Working Capital Management - Target a minimum current ratio of 1.2:1 by reducing current liabilities or accelerating debtor collection - Consider invoice financing to unlock cash from the £36,740 in trade debtors - Review the £278,330 in "other debtors"—what does this represent and how quickly can it be converted to cash?

5. 📊 Conduct a Related Party Risk Assessment - The intercompany relationships (Point Four Selfserve, Service Contracts Ltd, Instore Location LLP, Appy Shop Ltd, CAB Ventures) create a web of dependency - Assess whether these entities are financially sound—if they fail, Decision Vision could face cascading losses - Consider formalising intercompany arrangements with proper security and repayment terms

6. 🧾 Review the Contingent Liabilities - £67,833 in contingent liabilities needs investigation—what are the circumstances and likelihood of crystallisation?

Medium-term (6-12 months)

7. 💪 Build Reserves and Restore Positive Equity - Target a minimum retained profit reserve to bring net assets back to positive territory - Consider whether dividend or profit extraction should be suspended until the balance sheet is repaired - The directors should consider whether capital injection is needed—currently only £100 in share capital supports the business

8. 🔍 Strengthen Governance and Reporting - The accounts are unaudited and filed under the small companies regime—consider voluntary audit or accountants' review to provide stakeholders with confidence - Implement monthly management accounts with cash flow forecasting - Monitor the related party exposure as a standing board agenda item

9. 📋 Consider Restructuring Options - If the related party debts are unlikely to be recovered, consider whether a formal restructuring or voluntary arrangement might provide breathing space - Explore whether the business model can be adjusted to reduce working capital requirements

Risk Assessment Summary