A major cashflow problem

Toto

My first thought is Oh Bugg*r!

Remember a week or so ago when I was shouting from the laptop, bankruptcy could happen to anyone. Circumstances can change on a dime, especially when you're in business. So I thought I would offload today's mega drama for the benefit of a good old vent, but also to show the people such as BH how this sort of crap has happened to many here and now me too. Ok, I will probably be able to bail myself out of this, but it's going to be rough.

One of my clients just called me to say he has to put his business into receivership. He is owed 2.5 million by a client who has just gone into receivership himself. There is no way my client can clear his outstanding invoices, all together the money he owes is close on 2 million. He owes us the best part of 200,000. Ouch! I've spent the morning crunching numbers left right and centre. We have to pay for engineers, crew, hire of some gear and transportation which is around £163,000. This is for a major tour.

I would cry, but women in business don't do that (according to Martha Stewart) so I'll hold off on that until I finish for the day.

I think I'm going to have to use the cash we have to pay the real people, our freelance engineers and crew. The rest is going to have to wait, but it's going to be many months before we are working for profit again. If this happens again, that's us in court with our SOAs.

My story isn't unique. As I have said, many of our friends on this board have suffered very similar fates. This is why I get so bloody mad at the bigoted crap I see written here by people who have no clue how delicate the thread is between a very successful business to insolvency.

rufus79

Thanks for that. I really hope things work out for you, I would hate for you to be where I am just now, but yes, it does show how easily these things can happen. All the best, and let us know what happens.

wherediditallgo

I really hope things work out for you, Toto, & thanks for posting this. Someone in the US said that a very large percentage of the population are just one pay cheque away from homelessness. I wouldn't be surprised to find a large percentage of the population were just one pay cheque away from insolvency too - after all, it's not just your own pay, it's other people's too. Good luck.

NekoZombie

Toto, such bad news! I hope you can weather your way through...you're right, we all exist by a thread that could very easily snap.

Jane_East_Yorks

Toto,

That is truly awful, if anybody has the determination and resolve to work through such a nightmare it is you and your O.H.

My O.H has just rung and asked me to convey our best wishes because he's locked out of the site and can only read threads and not post anything.

Love and best wishes,

Jane xx

philnicandamy

Toto..can only echo what everyone else said good luck with everything, I know its no consilation but my brother had his own firm in bradford a few years ago dealing in catering equipment installation/maintanence etc & a major contract holder hit the wall owing him thousands...he found a way out in the end & still trades today...keep us informed & i'll cross everything I can physically cross for you

P

sammy115

Hi Toto

I don't know what made me read this board today, i don't normally! I am so sorry to hear of your bad news. My thoughts are with you, and my fingers crossed that things work out.

And i don't care what martha stewart says. Have a bloody good blub if you have to, I would......!!!!!!!!!!!!!!!!!!!!!!!!!!!!{HUGS}}}}}}}}}}}}}}}}}}

Toto

Thanks everyone. I feel a bit shellshocked at the moment, but I've spent a lot of the day working out figures and calling our suppliers. I've made a spreadsheet of all invoices relating to this tour, and catagorised them from very urgent to can wait.

My priority is getting the little guys paid, the ones who will feel the pain from a couple of hundred quid, the engineers and crew. These are ordinary working people so I don't want them to suffer. Then we have the mid sized businesses who can ride out a couple of thousand for a few months, to the big boys who have too much money anyway:p

We have enough in the bank to pay all of the little people today, my personal savings will cover any of the screamers from the bigger companies who decide to be a pain. Of course this means no salary for us in the forseeable, this is going to be painful.

OH is doing some sub contract work, we are going to have to use that money to cover our expenses, rent etc and put him out on as many sub contract jobs as we can.

We do have other jobs due to be paid this month, hopefully all being well we can plow every penny we have in and get this cleared within 6 months. It's all a bit of a mess, we were negotiating to sell the business, so this has put us back a bit, we need to get the cashflow back into the black otherwise we won't get what we should.

This is the second time this has happened, the first time was a much smaller client, it is an occupational hazzard in our industry, we all go through it. The best thing about that is our more seasoned suppliers understand because they've been through it too.

Thanks again everyone for your support, keep all of those bits crossed for me, I'm not quite ready to meet the OR yet.

Conor_3

Personally, I make sure that I don't end up with a level of outstanding invoices that I can't afford to cover should a client go to the wall.

Toto

WEll good for you conor, but obviously my business is very different to yours. Would you suggest we don't take work just incase 3/4 of our clients go bust? Where do you draw the line? Cash in hand up front? I can just see Eric Clapton et al agreeing to that!

Broken_hearted

Conor wrote: »

Personally, I make sure that I don't end up with a level of outstanding invoices that I can't afford to cover should a client go to the wall.

It doesn't work like that most GOOD accounts run three month behind. You can't afford to lose business especially if you are a small business as larger companies will just go elsewhere.