H2H BUSINESS FINANCE LIMITED

Executive Summary

H2H Business Finance Limited is a young, small-scale finance intermediary showing early signs of financial fragility, particularly with negative working capital and minimal net assets. While not in immediate distress, the company must focus on improving liquidity and revenue generation to strengthen its financial health. With prudent cash flow management and potential capital support, the prognosis for stabilizing and growing the business is cautiously optimistic.

H2H BUSINESS FINANCE LIMITED - Analysis Report

Company Number: 13816765

Analysis Date: 2025-07-20 18:36 UTC

Financial Health Assessment for H2H Business Finance Limited

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1. Financial Health Score: C

Explanation:
The company shows signs of early-stage financial strain with a very slim positive net asset base (£86) and negative working capital (£-3,213). While it is not in immediate distress, its liquidity position is weak, indicating the need for close monitoring and prompt financial management improvements. Given it is a young company (incorporated December 2021), some initial investment and operating losses are expected, but the current balance sheet suggests fragile financial health.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	3,299	Low asset base, typical for a start-up
Current Assets (Cash + Debtors)	21,357	Cash is £18,477, showing some liquidity
Current Liabilities	24,570	Higher than current assets — liquidity concern
Net Current Assets (Working Capital)	-3,213	Negative; company may face short-term cash flow issues
Total Assets Less Current Liabilities	86	Barely positive net asset value; minimal buffer
Shareholders Funds	86	Equity base is very thin, indicating limited retained earnings or investment

Additional Notes:

• Current liabilities exceed current assets, indicating the company’s "cash flow heartbeat" is weak, risking inability to cover short-term obligations without additional financing.
• The company carries intangible assets (website development) and tangible assets (computer equipment) representing investment in operational infrastructure.
• The company employs 2 people, consistent with a micro/small enterprise.

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3. Diagnosis: Financial Condition and Underlying Health

The financial snapshot reveals a company in its infancy with limited capital backing and a precarious liquidity position. The “symptoms” include:

• Negative Working Capital: A red flag indicating that the company may struggle to pay its bills on time without relying on external funding or generating quick revenue inflows.
• Minimal Net Assets: Equity is almost negligible, suggesting limited retained profits and a thin margin for absorbing losses or shocks.
• Healthy Cash Presence: Cash holdings of £18,477 provide some relief, but the pressure from short-term creditors (£24,570) outweighs this, indicating a tense cash flow scenario.
• No Audit Requirement: The accounts are unaudited, implying the company is small and possibly still developing financial controls.

Overall, the company is showing early-stage financial fragility but no explicit signs of insolvency or distress. It appears to be in a "convalescent" phase typical of new businesses where initial expenses and investments exceed income.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Liquidity (Working Capital):

   • Improve cash flow management to reduce current liabilities or accelerate debtor collections.
   • Consider short-term financing options or equity injection to bolster working capital.

2. Cost Control and Revenue Growth:

   • Review operating expenses to limit unnecessary costs that may exacerbate cash strain.
   • Focus on expanding client base and sales to generate sustainable revenue inflows.

3. Financial Monitoring and Reporting:

   • Implement regular cash flow forecasting to anticipate liquidity needs.
   • Prepare management accounts monthly to track financial "vital signs" closely.

4. Capital Structure Review:

   • Engage shareholders to consider additional capital investment if necessary to enhance the equity base and provide a buffer against losses.
   • Explore grants or financial support available for start-ups in the financial intermediation sector.

5. Director Oversight and Governance:

   • Directors should maintain active oversight given their control and shareholding.
   • Ensure compliance with all filing deadlines and maintain transparent communication with stakeholders.

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