Going Concern

While the UK economy may be making a slow recovery from recession, many businesses are going to be feeling some pain for quite some time to come. In particular, the benign corporate credit environment of just a couple of years ago has been replaced by a much tougher funding landscape. That means some businesses may struggle to refinance existing loans that will hit maturity soon. In turn, restricted liquidity arising from their inability to refinance will change their business’ prospects. And that could make it more difficult for directors to meet their obligation to state that their business will be able to operate as a going concern and prepare the financial statements accordingly. It’s a dilemma that more businesses are going to have to confront.

Directors who open communication channels between themselves, their lenders and their advisors as early as possible are more likely to achieve a better outcome for the business and can help ensure that any necessary actions can be taken before a crisis point is reached. The worst possible response would be to leave issues unresolved and question marks hanging over the business. While steps can be taken to address even the most difficult circumstances, as time passes the options available will become increasingly narrow.

Our latest report highlights the growing importance of this issue due to the increasing level of debt maturing in the next three years. It aims to educate directors to deal with this issue sooner rather than later and provides a view point from lenders as well as highlighting the issue from an audit perspective.

Click here to read more in our report.