MATTER (B2B) LTD

Executive Summary

Matter (B2B) Ltd has demonstrated strong revenue growth and profitability in its initial years, supported by positive net current assets and modest leverage. However, its low cash reserves and reliance on director loans introduce some liquidity risk. Conditional credit approval is recommended with close monitoring of cash flow, debtor collections, and debt servicing capabilities to ensure ongoing financial stability.

MATTER (B2B) LTD - Analysis Report

Company Number: 13887831

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

1. Credit Opinion: CONDITIONAL APPROVAL
   Matter (B2B) Ltd is a relatively new company (incorporated 2022) that has demonstrated rapid revenue growth with turnover reaching £2.33M by March 2024 from zero in 2022. The company reported a healthy operating profit (£306K) and net profit after tax (£222K). The balance sheet shows positive net current assets (£350K) and net assets of nearly £97K on a group basis, reflecting a sound financial position. However, the company has relatively modest equity and some bank loans and intercompany loans are present, which suggests moderate leverage. The directors have also advanced unsecured, interest-free loans to the company, indicating some reliance on internal funding. Given the strong profitability and growth but limited equity cushion and reliance on director loans, credit should be extended on a conditional basis with monitoring of liquidity and loan repayments.

2. Financial Strength:

• Fixed assets are £63K, mostly tangible.
• Current assets stand at £712K, dominated by trade debtors (£400K) and other debtors (£289K).
• Cash balances are low at £22.5K, indicating limited immediate liquidity.
• Current liabilities total £651K, mainly trade creditors and tax liabilities.
• Net current assets of £350K show positive working capital but with a high debtor balance, there is some risk of collection delay.
• Long-term liabilities include bank loans (£26.7K) and a significant intercompany loan (£413K) on the company accounts (not consolidated in group).
• Shareholders’ funds are low at £97K group level, reflecting the early stage of the business but growing from £194 previously.

Overall, the financial position is stable but equity is thin relative to turnover and liabilities.

3. Cash Flow Assessment:

• Cash on hand is low (£22.5K) relative to current liabilities (£651K), implying potential short-term liquidity pressure.
• High trade debtor balance (£400K) is a concern for cash conversion; credit control and debtor ageing should be monitored closely to avoid cash flow strain.
• The company generated operating profit of £306K, which supports positive cash flow from operations.
• Directors’ loans totaling ~£138K (unsecured and repayable on demand) provide an additional liquidity cushion but represent related-party risk.
• Taxation and social security creditors are significant (£326K), which may impact near-term cash flow requirements.

In summary, cash flow is somewhat tight with reliance on debtor collections and director advances.

4. Monitoring Points:

• Debtor ageing and collection efficiency to ensure timely cash inflows.
• Timely repayment of director loans and bank borrowings to manage leverage risk.
• Evolution of net current assets and liquidity ratios given low cash balances.
• Profitability trends to confirm sustainable earnings supporting debt service.
• Any increase in tax liabilities or other short-term creditors that could strain liquidity.
• Monitor any changes in ownership/control or director appointments for governance impact.