How do I read a company's accounts to see if it can pay me?
The short answer
Four lines. Open the newest accounts on Companies House and read net current assets, net assets and cash against bills due within a year, then check the date they were made up to. That date matters most: a private company has nine months after its year end to file3, and the next set is due a year later, so the newest accounts can show it as it was almost 21 months ago3. A small company may leave out its profit and loss account4, so there may be no turnover to read.
What you can add
A new customer worth £9,600 a month
Say a packaging supplier is asked on 6 October 2026 to supply a new customer £9,600 a month on 30-day terms. The newest accounts are made up to 31 March 2025 (554 days, about 18 months old) and were filed on 19 December 2025. The next set is not due until 31 December 2026, so these figures could be 21 months old before anything newer appears. The balance sheet shows stock of £96,000, debtors (what its own customers owe it) of £71,800, cash of £16,500, and creditors due within a year of £231,900.
- Stock£96,000.00
- Debtors: what its own customers owe it£71,800.00
- Cash at bank£16,500.00
- Creditors due within a year−£231,900.00
- Net current liabilities-£47,600.00
That is 79p of short-term assets for every £1 of short-term bills (£184,300 ÷ £231,900), counting the stock in full. If you invoice at the end of each month, two months of deliveries, £19,200, are out before the first invoice falls due.
The road ahead
Six steps to read it, one to act on it.
Step 2: Note three things before any number
Write down the 'made up to' date (the day the books were closed), the date the accounts were filed, and the type of accounts. The first tells you how old the picture is.
Step 3: Check which type of accounts it is
A micro-entity (any two of: turnover of £1,000,000 or less, £500,000 or less on the balance sheet, 10 employees or fewer5) can send Companies House only a balance sheet5, so there is usually no turnover to find.
A small company (any two of: turnover of £15,000,000 or less, £7,500,000 or less on the balance sheet, 50 employees or fewer5) may leave out its profit and loss account4. If it does, its balance sheet must say so4.
Step 4: Read the three lines on the balance sheet
'Net current assets (liabilities)' is what the company holds as cash, stock and money owed to it, less the bills due within a year. Below zero, it is short. A micro-entity can show current assets as one total6, so there may be no cash line. Then this line is the nearest you get to cash against the bills.
'Net assets (liabilities)' below zero means it owes more than it owns. That is roughly one of the two tests a court uses8 to treat a company as unable to pay its debts. The other is not paying debts as they fall due, so set 'cash at bank' against those one-year bills. A court decides; the balance sheet shows one day.
Step 5: Read the notes and the Charges tab
In the notes, look for loans secured on the company's assets, money owed to directors, and any wording about 'going concern', which is whether the directors expect it to keep trading.
On the company page, open the Charges tab1. It lists the loans the company has secured on its assets, and a lender with a charge has a claim on those assets that you do not.
Step 6: Check the filing record
Step 7: Set your terms to fit what you found
If the balance sheet looks short or the figures are old, offer a lower credit limit, ask for cash up front, or ask for recent management figures (the numbers they use to run the business).
Then search for court judgments against the company: each search costs £6 to £109. The page on checking whether a company is about to go under covers the Gazette and winding-up petitions.
The letter
This page is about reading, so there is nothing to send to anyone.
When not to bother
When it isn't worth it
- The order is small, or you can take cash up front. Ten minutes on accounts costs more than the risk. Take payment first and move on.
- The company is too new to have filed. There is nothing to read yet, so ask for references or take payment first.
- The accounts look strong but the customer pays late. Accounts say nothing about habit. Look for judgments against the company, and ask what other suppliers found.
- Your customer is a sole trader or an ordinary partnership. The register covers companies and LLPs1, so there are no accounts to find. Check them another way.
The Wolf's note
Accounts are a photograph taken on one day, and the next one may be a year away. A tidy set is no promise to pay, and a late one proves nothing alone. Settle the terms before the first delivery, while the choice is still yours.
Mr. Wolf · the AI inside WolfX
What comes next
Your next move
How do I check a new client can pay before I start work?
Only partly. Ten minutes on the free records shows who a client is, not whether it will pay.
6 min read · Letter included
Is this company legit? How do I check a UK company before I work for it?
Go by the company number, not the name.
5 min read · Letter included
What do "dormant", "dissolved", "in liquidation" and "proposal to strike off" mean on Companies House?
Only dissolved means a company has gone.
4 min read
Don't want to do this yourself?
The Wolf does every step for you. He works out the sums, writes the letters and keeps track of every date. Nothing goes without your yes.