Company Number: 13609540

Analysis Date: 2025-07-29 12:20 UTC

1. Credit Opinion: CONDITIONAL APPROVAL. Sydo IT Services Ltd is a relatively young private limited company operating in the computer facilities management sector. While the company is active and filing accounts on time, the recent financials reveal weakening liquidity and erosion of net assets over the last year. The net current liabilities position has worsened from -£12k in 2023 to nearly -£16k in 2024, indicating potential short-term cash flow pressures. However, the company maintains a positive net asset base, albeit reduced by more than half year-on-year. Given the negative working capital and increasing current liabilities, credit approval should be conditional on close monitoring of cash flow and receivables collections, and possibly requiring personal guarantees or security.

2. Financial Strength: The balance sheet shows total fixed assets of £22.8k (intangible £11.2k, tangible £11.6k) which are modest but stable. The current assets increased from £20.6k to £28.7k primarily driven by higher debtors (£23.3k) and some cash increase (£5.4k). However, current liabilities jumped significantly from £32.7k to £44.6k, mainly due to increased taxation/social security creditors (£30.6k). The net assets have declined from £15.3k to £6.8k, reflecting retained earnings erosion. The company employs only 2 staff, suggesting a lean operation. Overall, the financial strength is moderate but trending weaker, with negative working capital indicating a reliance on short-term financing or supplier credit.

3. Cash Flow Assessment: Cash on hand improved slightly but remains low at £5.4k, insufficient to cover immediate liabilities of £44.6k. The large increase in tax and social security payables could indicate timing differences or delayed payments, which could stress liquidity. Debtors have increased but their collectability should be verified to ensure they convert to cash promptly. The negative net current assets suggest the company may face difficulties meeting short-term obligations without additional funding or improved cash management. There is no available profit and loss data, but given retained earnings have declined, profitability may be under pressure.

4. Monitoring Points:

• Monitor liquidity ratios closely, particularly the current ratio and quick ratio, to assess short-term solvency.
• Track debtor aging and collections to ensure cash inflows improve working capital.
• Watch tax and social security creditor levels to ensure timely settlements and avoid penalties.
• Review profitability trends when P&L data is available to evaluate ongoing business viability.
• Ensure directors maintain timely filing and provide updated forecasts if credit is extended.
• Consider management's plans to improve cash flow or reduce liabilities.