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How to Spot a Company in Financial Trouble Before It’s Too Late

Learn to identify early warning signs of financial distress in UK companies using public data, preventing costly partnerships and investments.

How to Spot a Company in Financial Trouble Before It’s Too Late

Businesses and investors often get caught off guard when a partner or supplier collapses. The good news is that financial trouble doesn't happen overnight—there are usually clear warning signs visible in public data. This guide shows you how to spot these red flags early, using free UK resources, so you can avoid bad partnerships and make smarter decisions.

Early Warning Signs in Public Data

Financial distress typically shows up in several key areas before it becomes obvious. Here's what to look for:

1. Overdue Filings at Companies House

Companies House requires regular filings, and delays are often the first sign of trouble.

  • Confirmation statements: Must be filed annually. Delays suggest administrative neglect.
  • Annual accounts: Due within 9 months of year-end. Late filings indicate cash flow issues or accounting problems.
  • How to check: Search the company on Companies House, look at the "Filing history" tab for overdue documents.

2. Director Resignations and Changes

Sudden changes in leadership can signal internal problems.

  • Mass resignations: Multiple directors leaving at once often precedes collapse.
  • New directors: Sometimes appointed by creditors or administrators.
  • Where to find: Companies House director information, LinkedIn for background on new appointees.

3. Hiring Freezes and Layoffs

A company's workforce changes can reveal financial health.

  • Hiring pauses: No new job postings for months suggests budget constraints.
  • Layoff announcements: Public notices or social media posts about redundancies.
  • Sources: LinkedIn company pages, job boards like Indeed or Reed, company social media.

4. Negative Sentiment and Reviews

Customer and employee feedback often reflects operational issues.

  • Declining reviews: Drop in ratings on Trustpilot or Google Reviews.
  • Employee complaints: Low Glassdoor scores, especially for management or pay.
  • News coverage: Negative press about payment delays or disputes.

Where to Find Each Signal

Companies House (companieshouse.gov.uk)

  • Free access to all filings and director information
  • Search by company name or number
  • Look for "dissolved" or "administration" status

Job Boards and LinkedIn

  • Monitor company job postings over time
  • Check employee count changes on LinkedIn
  • Look for "We're hiring" vs. silence

Review Platforms

  • Trustpilot for customer sentiment
  • Glassdoor for employee feedback
  • Google Reviews for local businesses

News and Social Media

  • Google Alerts for company name
  • Company social media for announcements
  • Industry news sites for broader context

Real UK Examples

Carillion (2018 Collapse)

  • Warning signs: Delayed filings, director changes, negative press about contracts
  • Missed signals: Investors ignored mounting debt visible in accounts
  • Impact: £7 billion collapse, affecting thousands of suppliers

Thomas Cook (2019)

  • Red flags: Years of losses in accounts, management changes, supplier payment issues
  • Overlooked: Customer reviews showing dissatisfaction, staff turnover
  • Result: Sudden collapse stranding 600,000 holidaymakers

Patisserie Valerie (2018)

  • Indicators: Accounting irregularities, director resignations, store closures
  • Context: Chain of 200+ cafes collapsed within months
  • Lesson: Even established brands can hide problems

How Real-Time Monitoring Prevents Bad Partnerships

Manual checks are good, but they miss subtle changes. Automated monitoring tools can:

  • Alert you to new filings or director changes
  • Track hiring activity across platforms
  • Monitor sentiment trends
  • Provide risk scores based on multiple data points

This proactive approach helps you spot trouble before it affects your business.

Action Steps for Better Due Diligence

  1. Set up monitoring: Create alerts for key companies in your supply chain
  2. Regular reviews: Check critical partners quarterly, not just annually
  3. Diversify suppliers: Don't rely on single sources that show warning signs
  4. Document findings: Keep records of your research for future reference

By paying attention to these signals, you can protect your business from the ripple effects of supplier collapse. Remember, prevention is always cheaper than cure.

Want to automate your company monitoring? Try Ventur for real-time risk assessment.

Questions about company research? Email us at hello@venturhq.co.uk

Stay vigilant,
The Ventur Research Team