UNSEL CONSULTANCY LTD

Executive Summary

UNSEL CONSULTANCY LTD is facing liquidity challenges indicated by negative working capital and cash balances, despite maintaining a small positive net asset position. Immediate focus on cash flow improvement, debtor management, and working capital enhancement is critical to stabilize operations and avoid financial distress. With proactive management and possible capital support, the company can improve its financial health and sustain business viability.

UNSEL CONSULTANCY LTD - Analysis Report

Company Number: 13117560

Analysis Date: 2025-07-20 13:19 UTC

Financial Health Assessment for UNSEL CONSULTANCY LTD

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1. Financial Health Score: D

Explanation:
UNSEL CONSULTANCY LTD currently exhibits signs of financial distress primarily due to ongoing negative working capital and cash flow difficulties. While the company maintains positive net assets and shareholders’ funds, persistent current liabilities exceeding current assets (negative net current assets) indicate liquidity challenges that could impair operational stability if not addressed promptly.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	-1,176	Negative current assets indicate potential accounting classification issues or overdue debtor balances; a red flag for liquidity.
Cash at Bank	-176	Negative cash balance signals immediate cash flow distress; the company is effectively overspent or has bank overdrafts.
Debtors	-1,000	Negative debtor figure unusual, possibly representing write-offs or accounting adjustments; warrants review.
Current Liabilities	2,385	Current obligations exceed liquid assets, creating pressure to meet short-term debts.
Net Current Assets (Working Capital)	-3,561	Negative working capital, a symptom of financial strain; the company may struggle to cover short-term liabilities.
Net Assets / Shareholders’ Funds	270	Positive but minimal equity base; the company has some net worth but it is very thin, indicating limited buffer for losses.
Share Capital	100	Very low share capital consistent with a micro/small company.

Additional Context:

• Fixed assets (tangible) at £3,831 provide some stability but are illiquid.
• Average employees: 1 — a very lean operation.

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3. Diagnosis: Underlying Financial Condition

UNSEL CONSULTANCY LTD shows symptoms of financial distress, particularly liquidity problems. The negative cash and debtor balances combined with current liabilities exceeding current assets highlight a "weak pulse" in operational cash flow. This situation can be likened to a patient with poor circulation — while the body (business) has some vital organs (fixed assets and equity), the blood flow (cash and working capital) is insufficient to sustain healthy function.

The company’s positive net assets suggest it is not insolvent, but the thin equity margin and consistent negative working capital indicate vulnerability to financial shocks and limited flexibility to invest or expand without external support.

The negative debtor figure may reflect accounting treatments such as provisions for bad debts or adjustments, which could indicate collection difficulties or disputes with customers.

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Cash Flow Management:

   • Conduct a detailed cash flow forecast to identify timing gaps and prioritize urgent payments.
   • Negotiate extended payment terms with suppliers to ease short-term cash pressures.

2. Review and Rectify Debtors:

   • Investigate the negative debtor balance urgently. Ensure accurate debtor records and improve collection efforts to convert receivables into cash promptly.

3. Increase Working Capital:

   • Consider a short-term financing facility or director loans (noting there is already a small director loan of £227) to bridge liquidity gaps.
   • Alternatively, inject additional equity capital to strengthen the balance sheet.

4. Cost Control and Operational Efficiency:

   • With only one employee, review all operating costs for potential savings.
   • Focus on profitable contracts and avoid overextension in projects.

5. Regular Financial Monitoring:

   • Adopt monthly management accounts and KPIs to detect early warning signs and avoid surprises at year end.
   • Engage with a financial advisor for ongoing health checks and strategic planning.

6. Prepare for Contingencies:

   • Given the thin equity buffer, develop a contingency plan to manage unexpected expenses or downturns without jeopardizing business continuity.

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Executive Summary