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This session Kevin Artlett will cover the following topics:

Why Red Flags Matter 

• Every business leaves a trail of how it is trading – good or bad
• Accountants are often the first to see warning signs
• By the time issues appear in year-end accounts, it is often too late to act
• spot a failing business from the numbers?”

What Are Red Flags? Proactive vs Reactive 

• A red flag = an early indicator of risk or instability
• Examples:
  • Late filings
  • Poor payment behaviour
  • Increasing debt levels
  • Changes in leadership

Where to Find Red Flags in Practice 

• Statutory filings
  • Late or non-filing
• Management accounts
  • Falling margins, losses, declining reserves
• Debtor book / receivables
  • Increasing debtor days
  • Aged debt creeping
• Credit reports
  • CCJs, legal actions
• Client conversations
  • Behavioural warning signs

Key Red Flags to Watch 

• Financial Red Flags:

• Deteriorating performance
• Increasing borrowing
• Weak liquidity

• Operational Red Flags:

• Frequent changes in directors or finance staff
• Poor documentation or controls
• Complex group structures

• Credit & Behavioural Red Flags:

• Late payments becoming normal
• Requests for extended terms
• Increasing disputes
• Avoidance of communication
• Excuses around payment delays

Impact of Missing Red Flags 

• Impact on Clients:

• Cash flow crisis
• Inability to pay suppliers, staff, HMRC
• Increased borrowing costs
• Insolvency risk

• Impact on Directors:

• Personal stress and pressure
• Poor decision-making
• Loss of control over the business

• Impact on Accountancy Practices:

• Loss of fee income
• Bad debts from unpaid invoices
• Reputational damage
• Increased regulatory scrutiny
• Reduced practice valuation

Early Intervention & Practical Actions - Practical Steps:

• Review management accounts more frequently
• Monitor debtor days and payment behaviour
• Strengthen cash flow forecasting
• Challenge assumptions (e.g. “they always pay”)
• Encourage earlier client conversations

Collaboration – The Missing Link 

• Accountants:
  • Identify issues
  • Provide financial insight
• Credit professionals:
  • Manage payment behaviour
  • Improve cash collection
  • Support difficult conversations

Benefits of Collaboration:

• Faster intervention
• Better client outcomes
• Reduced risk exposure

By the end of this session, attendees will: 

• Understand what “red flags” in business actually look like
• Recognise how early warning signs appear in financial and behavioural data
• Appreciate the impact of missed risks on both clients and their own practice
• Learn how to act proactively rather than reactively
• Understand the value of collaboration with credit management specialists

Course level: All levels