RELATIONAL BODYWORK LTD

Executive Summary

Relational Bodywork Ltd is a recently established company with fragile financials characterized by negative working capital and minimal net assets. Its liquidity position and cash flow generation are insufficient to support debt servicing under current conditions. Due to these weaknesses, the company presents a high credit risk and is not recommended for credit approval without significant financial improvements or additional security.

RELATIONAL BODYWORK LTD - Analysis Report

Company Number: 14226446

Analysis Date: 2025-07-20 11:45 UTC

1. Credit Opinion: DECLINE
   Relational Bodywork Ltd exhibits weak financial health with persistent negative working capital and minimal net assets, raising significant concerns regarding its ability to meet short-term obligations. Despite a modest improvement in net assets from a negative £306 to a positive £132, the company’s current liabilities significantly exceed current assets, indicating liquidity stress. The presence of negative trade debtors (-£886) is unusual and may reflect accounting anomalies or potential receivable write-offs, further complicating cash flow reliability. Given the company’s short operating history since incorporation in mid-2022 and absence of employees, there is limited evidence of operational scale or revenue generation to support debt servicing. The director is also an educator residing outside the UK, which may raise concerns about active management and oversight. Overall, the credit risk is elevated and approval of credit facilities is not recommended at this stage without substantial financial strengthening or guarantees.

2. Financial Strength:
   The balance sheet shows very limited fixed assets (£4,490), mainly computer equipment, and current assets of only £396 against current liabilities of £4,754, resulting in a net current liabilities position of -£4,358. Shareholders’ funds are nominal at £132, reflecting marginal net asset value and minimal capitalization (only £1 share capital). The company’s losses have eroded equity in previous years, only slightly reversed in the latest period. The negative debtor balance suggests potential accounting irregularities or adjustments that require clarification. Overall, the financial structure is fragile with inadequate equity buffer and a high risk of insolvency if liabilities crystallize or revenues fail to improve.

3. Cash Flow Assessment:
   Cash balances have improved to £1,282 from £556 but remain insufficient relative to short-term payables. The company’s negative working capital position indicates reliance on external funding or creditor extensions for liquidity. Absence of employees and limited turnover disclosure suggests minimal operating cash inflows. The overdraft facility of £1,052 indicates some external borrowing but the overall liquidity risk remains high. The company’s current liabilities are dominated by “other creditors” (£3,701), which may include unsecured trade payables or accrued expenses, representing potential pressure points. Without significant cash flow improvement, the company’s ability to service debt or supplier payments on time is doubtful.

4. Monitoring Points:

• Working Capital: Monitor improvements in current assets versus current liabilities to assess liquidity recovery.
• Cash Flow: Track cash generation from operations and changes in overdraft usage.
• Debtor Quality: Clarify the nature of negative trade debtors and ensure receivables management improves.
• Profitability Trends: Evaluate future filed accounts for evidence of sustainable profitability and reserve build-up.
• Director Involvement: Confirm active and effective management oversight given director’s occupation and residence abroad.
• Creditors’ Aging: Review aging reports on payables to detect any payment delays or creditor pressure.