Not enough capital for payroll

pioneer22

Hi,

I am in the position that I am aware we do not have enough cash for payroll in November, the company I work for is potentially going to be acquired. Other than looking for another role which I am is there anything else I can do to protect myself? 

Brie

Ensure you have copies of your employment contract and anything that might all be online like payslips, P60 etc.  Also make notes of all your work benefits whether you or your employer is/was paying for them.  You'll want to ensure that if there are redundancies due to the acquisition you get the correct payout or otherwise have your TUPE properly managed.

ReadingTim

Cut back on unnecessary expenditure and ensure you have sufficient savings to weather a few months without pay, to the extent you haven't done this already. 

TELLIT01

Should the company even be continuing to operate?  I thought it was illegal to trade when insolvent.

Thrugelmir

TELLIT01 said:

Should the company even be continuing to operate?  I thought it was illegal to trade when insolvent.

Takeover or administrators by the sounds of it. 

Sandtree

TELLIT01 said:

Should the company even be continuing to operate?  I thought it was illegal to trade when insolvent.

Who says they are insolvent? Ignoring the thread's title the OP states its a liquidity/cash issue... a company can be fully solvent but have a temporary cashflow issue. Depending on the cause there are a series of different ways that liquidity can be created if the company has assets on the balance sheet to raise them against.

Liquidity can lead to an insolvency but more often it leads to a hit on the P&L instead when they are forced to turn to factoring companies to raise cash against issued invoices etc.

Thrugelmir

Sandtree said:

TELLIT01 said:

Should the company even be continuing to operate?  I thought it was illegal to trade when insolvent.

Who says they are insolvent? Ignoring the thread's title the OP states its a liquidity/cash issue... a company can be fully solvent but have a temporary cashflow issue. Depending on the cause there are a series of different ways that liquidity can be created if the company has assets on the balance sheet to raise them against.

Liquidity can lead to an insolvency but more often it leads to a hit on the P&L instead when they are forced to turn to factoring companies to raise cash against issued invoices etc.

Majority of companies fail due to cashflow problems rather than being unprofitable themselves. Customers struggling to pay is often a primary cause. Even factoring invoices ultimately has it's limitations. 

Sandtree

Thrugelmir said:

Sandtree said:

TELLIT01 said:

Should the company even be continuing to operate?  I thought it was illegal to trade when insolvent.

Who says they are insolvent? Ignoring the thread's title the OP states its a liquidity/cash issue... a company can be fully solvent but have a temporary cashflow issue. Depending on the cause there are a series of different ways that liquidity can be created if the company has assets on the balance sheet to raise them against.

Liquidity can lead to an insolvency but more often it leads to a hit on the P&L instead when they are forced to turn to factoring companies to raise cash against issued invoices etc.

Majority of companies fail due to cashflow problems rather than being unprofitable themselves. Customers struggling to pay is often a primary cause. Even factoring invoices ultimately has it's limitations. 

I'm not sure its "most" but absolutely its a significant issue and can lead to failures, which my post acknowledges, however its not automatically the case that if at mid month the accounts are looking light for the month end payroll that the company will be bust by the end of the month