Worried about your employer’s finance?

Business is still tough at the moment for many organisations. If you are not in a role to see the finances of the company you work for, what are the signs you can look for that might suggest you should be worried about your employer’s finance and everything isn’t ticking along nicely?

Many people are thrown into financial turmoil if they are made redundant without warning. Most of us have commitments which suit our salary or wage level and a sudden drop in income can result in serious financial difficulty – sometimes even leading to bankruptcy. But anticipating redundancy can make a huge difference to your personal finances.

What are some of the common tell-tale signs?

• Have the staff perks disappeared? Has your company suddenly stopped supplying free tea and coffee? Are you paying for your own Christmas party? Has there been a removing of incentive schemes? Cutbacks on staff expenses and benefits are often a common sign that the company is starting to struggle.
• Are you doing more for no extra money? Are you being asked to take on other roles that weren’t part of your original job description without giving you more money for the extra work?
• Have high-level employees left? Big changes in management is a red flag and warning sign. They are often privy to financial information ahead of others and leave before the proverbial hits the fan.
• Are the bills piling up? Are there problems with your regular suppliers, or utilities? Unpaid or late bills suggest cash flow problems.
• Is there now a close monitoring of your efficiency? Do you now take note of the tasks you perform each day and ask about your role functions? Are they looking at who they can lose from a team?
• Have sales, orders and new contracts slowed down? A drop or change around your current clients, may not necessarily be a big problem, but can suggest a serious drop in performance indications. If you notice clients moving companies, or even a slow down in office calls it could be a suggestion things aren’t going well.
• Could you be the next to be laid off? If you’ve seen your co-workers go it can be a clear sign of redundancies and cutbacks.
• Has your company recently been sold, or merged with a larger organisation? If so, then business assets generally become more important than employees and staff changes, relocations and redundancies are likely.
• Has the boss gone quiet? Have the updates on performance or new initiatives and contracts ground to a halt? It could mean problems.
• Has a pay cut or unpaid leave been offered? Failing companies cut costs which can help prevent job losses or bankruptcy. Generally, this is evidence your employer is not on steady financial ground. Take it if you have to but prepare yourself to start looking for another position.

From a staff point of view, these can be key indicators that you not everything with your employer’s finance is, as good as it seems. Employers may want to cover up any struggles themselves as they look to try and work through problems.

What can your employer do in this position?

When things are getting tough, the options available will all depend on what circumstances the company finds itself in. If there is a solid business model there, but cashflow is slowing down the whole operations of the business, a commercial finance option could allow the company to trade out of trouble.

Alternatively, if it’s pressure from creditors which is effectively stopping you from trading comfortably, a formal repayment procedure such as a company voluntary arrangement (CVA), could provide you with the respite to save the company. However, if your employer knows they are insolvent and have no chance of trading their way through the trouble, they would be better off liquidating the company.

In summary

Many people are thrown into financial turmoil if they are made redundant without warning. Most of us have commitments which suit our salary or wage level and a sudden drop in income can result in serious financial difficulty. It’s key to have one eye on how the business is doing and be wary of your employer’s finance, look out for the tell tale signs.

People’s homes and lives can be put into jeopardy, although there are redundancy pay-outs during a liquidation, including a backup from the Government in the form of the Redundancy Payment Service, some people can sometimes find themselves facing bankruptcy.