Company Number: 13194690

Analysis Date: 2025-07-29 15:05 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

Options Financial Planning Ltd is a small, active private limited company operating in financial management since 2021. The company has a very modest equity base (£220 as of 2024) and has consistently reported net current liabilities over the last two years, indicating a working capital deficiency. Notably, the company’s liabilities include a significant director’s loan (£41,829 in 2024), which is non-interest bearing and has no formal repayment schedule, indicating reliance on informal financing. The cash balances have decreased substantially from £6,796 in 2023 to £2,533 in 2024, and debtors are minimal, suggesting limited cash inflows. The company’s net assets have declined from £539 in 2023 to £220 in 2024, reflecting erosion of equity capital. Given these factors, the company exhibits weak liquidity and a fragile financial position, but as it is still operating and has no overdue filings, credit may be extended on a conditional basis with close monitoring and possible guarantees or collateral.

2. Financial Strength

The balance sheet reveals minimal fixed assets (£903) and an increasing stock/work-in-progress balance (£52,072 in 2024 vs. £34,210 in 2023), which ties up significant working capital. Debtors have dramatically decreased from £39,050 in 2023 to £58 in 2024, possibly due to reclassification or collection. Current liabilities remain high (£55,174 in 2024), predominantly driven by loans and borrowings – all short-term and mainly composed of director’s loans (£41,829). The director's loan account structure, being interest-free and without formal repayment terms, reduces immediate cash outflow pressure but increases financial risk if the director withdraws support. The company’s net assets have nearly halved in one year, indicating capital erosion and limited buffer to absorb losses.

3. Cash Flow Assessment

Cash at bank is low and has declined significantly, indicating potential cash flow pressures. The minimal level of debtors and the high level of work in progress suggest that the company might be experiencing delays in billing or cash collection. Net current liabilities imply a working capital shortfall, which limits flexibility to meet short-term obligations from operating cash flows. The reliance on director’s loans suggests external borrowing is not accessible or the company prefers informal financing arrangements. Operating cash flow generation appears weak and the company may struggle to service any new debt without improving cash inflows or converting work in progress into cash.

4. Monitoring Points

• Track monthly cash flow and liquidity ratios closely to detect worsening cash shortages.
• Monitor the level and turnover of work in progress/stocks and conversion into billed revenue.
• Watch changes in director’s loan account balances and any formalisation of repayment terms.
• Review debtor collections and ageing to ensure cash inflows improve.
• Assess any changes in equity or capital injections that might strengthen the balance sheet.
• Observe compliance with filing deadlines and any changes in company status or director appointments.
• Evaluate the company’s ability to generate sustained profitability to rebuild reserves.