Strange creditor query

blobbyh

Apologies in advance for posting on this Forum but it's better here than on the other ones.

We're preparing our year end accounts for 2008 and have accruals approaching nearly £100k for the supplier of our IT equipment & consultancy services, much of which stretches back to well over a year ago and maybe as far back as two. In the past, we've forced him to invoice us for work he's done however in the current tight cash climate, we're now not so eager to chase him to chase us for money. We've even offered to do his accounts for him but he's strenuously refused this aid.

Today, we downloaded his abbreviated accounts from companies house and the following is a quick extract;

Debtors; £30k
Cash at bank and equivalents; £123k
Trade creditors; £120k

So he's around £33k solvent with plenty of cash (in theory) lying around. However, he was also issued with his first Gazette notice and threatened with being struck off within three months at the end of December 2008 presumably due to non-filing of accounts. This prompted him to urgently file his non-audited accounts at the end of last month but we're clearly not included within his debtors figure.

So does anyone think he's just plain dumb at accounts or is something more sinister underfoot such as potential tax or VAT avoidance?

Thanks in advance.

deanshepherd

My initial thought is that it just didn't get picked up when the accounts were prepared in a hurry.

Debtors are easy to establish but with 'amounts recoverable under contracts' the accountant very much relies on what the business owner tells them (certainly for smaller businesses).

A closer review of post-balance sheet transactions could have highlighted the issue but, with a rushed job, I suspect that was not done.

From your point of view, I would not be too concerned - particularly as it is his cash flow that is affected and not yours!

claudialowe

Hi Robert

Nice to hear from you again :thumbup1:

As Dean says, it sounds as though the accounts were done in a real rush, and without any real regard for the truth!

If the debtors are understated by about £100K, then perhaps the sales are as well :confused1:

Unfortunately, Co House just file what they are sent, and don't look at the content for any glaring errors - unless someone reports one, then they do.

I also agree with Dean that it is their problem not yours - if they owed you money, I would give you very different advice!!!!!!

Claudia