Phones 4U Ltd
In 2012 Phones 4U Ltd made a profit of £88million on sales of £963million and had shareholders funds of £437million. Less than two years later the company is in liquidation and the trade creditors in excess of £80million will be facing a difficult time as it is possible that there may not be a dividend to the unsecured creditors and any dividend may not be paid for many months.
History has shown that many companies of considerable financial strength have collapsed without any warning. The list is long and includes the likes of Barings, Woolworths, MG Rover and Comet. These companies have one thing in common - people felt that they were institutions that would be here for a long time and that businesses were comfortable in giving them credit to quite a high level and often for a long period.
The other worrying aspect is that many of these suppliers to Phones 4U who are now creditors may well have overdrafts or factoring facilities where the monies due from Phones 4U were the security for the advance.
What can be learned and how can businesses protect themselves from such a potential disaster. Factoring and Invoice Finance companies offer credit protection whereby an insurance company will insure against bad debts. Such insurance is only given against credit worthy companies and insurance cover would be granted to a company like Phone 4U who had a credit rating according to Creditsafe of £7.75 million in October 2013.
Findmeafactor can guide you through this process of both financing your working capital needs as well as protecting your business against major bad debts
History has shown that many companies of considerable financial strength have collapsed without any warning. The list is long and includes the likes of Barings, Woolworths, MG Rover and Comet. These companies have one thing in common - people felt that they were institutions that would be here for a long time and that businesses were comfortable in giving them credit to quite a high level and often for a long period.
The other worrying aspect is that many of these suppliers to Phones 4U who are now creditors may well have overdrafts or factoring facilities where the monies due from Phones 4U were the security for the advance.
What can be learned and how can businesses protect themselves from such a potential disaster. Factoring and Invoice Finance companies offer credit protection whereby an insurance company will insure against bad debts. Such insurance is only given against credit worthy companies and insurance cover would be granted to a company like Phone 4U who had a credit rating according to Creditsafe of £7.75 million in October 2013.
Findmeafactor can guide you through this process of both financing your working capital needs as well as protecting your business against major bad debts
RSS Feed
