Company Number: 14123893

Analysis Date: 2025-07-29 12:19 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   TQ SERVICES LTD shows a significant increase in fixed assets during the latest year, indicating capital investment likely aimed at growth or operational expansion. However, the company’s working capital position has deteriorated drastically from a positive £5,064 in 2023 to a negative £31,480 in 2024, primarily due to an increase in current liabilities (notably taxation and social security liabilities of £23,585). This raises concerns about short-term liquidity and the company’s ability to meet immediate obligations without additional financing or cash inflows. The absence of debtors in 2024 (compared to £6,882 in 2023) and minimal cash on hand (£14) further amplify liquidity risk. Given the company is relatively young (incorporated 2022), the increase in tangible assets suggests active development, but cash flow management appears strained. Approval is recommended subject to close monitoring of cash flow and confirmation of ongoing revenue generation to support debt servicing.

2. Financial Strength:
   The company’s net assets have increased substantially to £55,924 from £6,812 the previous year, driven by the addition of tangible fixed assets (£87,867 net book value) largely from recent capital expenditures. Shareholders’ funds reflect this growth, indicating equity injection or retained earnings accumulation. However, the large increase in creditors due within one year (£31,494) compared to prior periods signals potential liquidity pressure. The company carries minimal long-term liabilities (£463), which suggests limited gearing and financial risk from debt leverage. Overall, the balance sheet shows a stronger asset base but a stretched current liability position that impacts financial flexibility.

3. Cash Flow Assessment:
   Liquidity is a concern as current assets have dropped sharply from £7,316 to only £14, with cash also down from £434 to £14. Debtors have disappeared, implying either faster collections or a slowdown in sales on credit terms. Current liabilities have ballooned, mostly due to tax and social security obligations, indicating possible arrears or accruals. Negative net current assets (-£31,480) reflect a working capital deficit, which could impair the company’s ability to fund day-to-day operations without external support or improved cash inflows. Given these factors, cash flow management is critical, and the company’s ability to generate sufficient operating cash or secure short-term funding should be assessed before extending credit.

4. Monitoring Points:

• Track monthly cash flow and working capital trends to ensure timely payment of current liabilities.
• Monitor the collection cycle and turnover of debtors as these vanished in the latest accounts.
• Assess ongoing profitability and revenue growth to support the increased asset base and rising liabilities.
• Review tax and social security payment schedules to avoid penalty risks and ensure compliance.
• Evaluate capital expenditure plans for impact on liquidity and future earnings.