VECT LTD

Executive Summary

VECT LTD is a recently incorporated micro-entity in the IT consultancy sector facing critical liquidity and equity challenges, reflected by its negative working capital and shareholders’ funds. Immediate capital infusion and cash flow management are essential to stabilize its financial health and avoid insolvency risks. With focused operational and financial discipline, the company can regain a healthier balance sheet and build sustainable growth.

VECT LTD - Analysis Report

Company Number: 15313975

Analysis Date: 2025-07-20 13:30 UTC

Financial Health Assessment Report for VECT LTD

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1. Financial Health Score: D

Explanation:
VECT LTD shows signs of severe financial distress as evidenced by its negative net current assets and shareholders’ funds shortly after incorporation. While it is very early in its lifecycle (incorporated in late 2023), the current financial position indicates significant liquidity challenges and negative equity. The financial health score of D reflects a company at risk needing immediate attention to improve cash flow and capital structure.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	859	Very low level of liquid assets indicating limited cash and receivables.
Current Liabilities	20,500	Short-term debts significantly exceed current assets, showing liquidity strain.
Net Current Assets	-19,641	Negative working capital — symptoms of financial distress and cash flow problems.
Total Assets Less Current Liabilities	-19,641	Negative indicates liabilities outweigh assets even after considering short-term obligations.
Net Assets (Shareholders’ Funds)	-20,769	Negative equity indicating the company owes more than it owns — an unhealthy sign.
Average Number of Employees	3	Small workforce consistent with micro-entity status.

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3. Diagnosis

VECT LTD is in an early but critical stage of financial health that shows clear symptoms of distress:

• Liquidity Crisis: The company has a very low current asset base (£859) compared to its current liabilities (£20,500), resulting in a severe negative working capital of nearly £20k. This is akin to a patient with dangerously low blood pressure, signaling the company may struggle to meet short-term obligations.

• Negative Equity: Shareholders’ funds are negative (£-20,769), indicating the company’s total liabilities exceed its total assets. For a newly started business, this could be the result of initial funding arranged as loans or unpaid expenses and losses during the start-up phase, but it represents an unhealthy financial baseline.

• Early Operational Stage: Incorporated less than a year ago, the company is understandably in a development phase. The average headcount of 3 shows a small team likely focused on IT consultancy and software development, which aligns with its SIC codes.

• No Audit Requirement: The micro-entity exemption means accounts are unaudited, so figures are unaudited estimates but still provide a reliable snapshot.

• No Overdue Filings: The company is compliant with filing deadlines, which is a positive governance sign.

In medical terms, VECT LTD is a patient recently admitted with severe dehydration (liquidity shortage) and malnutrition (negative equity). Without intervention, these conditions may worsen and threaten survival (business continuity).

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4. Recommendations

To improve financial wellness and stabilize the company’s health, the following actions are advised:

• Raise Additional Capital: Seek further equity investment or shareholder loans to restore positive net assets and strengthen the balance sheet. This is equivalent to administering an IV drip to replenish vital fluids.

• Improve Cash Flow Management: Tighten control on payables and accelerate receivables collections. Consider negotiating extended payment terms with creditors to ease immediate cash demands.

• Cost Control and Budgeting: Monitor operating expenses carefully given the small team size. Avoid unnecessary overheads until cash flow improves.

• Explore Revenue Growth: Accelerate client acquisition and project delivery to increase inflows. Early revenue generation will provide much-needed “nutrients” to the business.

• Financial Forecasting: Prepare rolling cash flow forecasts to anticipate and manage liquidity needs proactively.

• Engage Advisors: Consider consulting financial or business advisors specializing in start-up growth and turnaround for tailored strategies.

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