Increase in pricing during the last month raises doubts at Small World
In a surprising turn of events, Small World Financial Services, a prominent money transfer company, entered special administration on June 18, 2023. Despite processing £5.2 billion in transactions and reporting revenue of £137 million in 2022, the company was unable to maintain operations as a going concern.
The company's services were halted on June 10, 2023, and in its final month of operation, Small World significantly increased its pricing for all payout types, presumably aimed at raising short-term funds. This move, however, seems to have been insufficient to address the underlying financial or operational challenges.
A review of the 2022 accounts showed potential warning signs, including an acknowledgment that the company might not be able to meet all its obligations if it did not grow sufficiently in 2023 and 2024. The company received a £20 million investment from principal shareholders in an attempt to sustain the business until most of 2024, even in a downside case.
The precise reasons for the administration are not yet clear, but common causes include liquidity problems, insolvency risks, or failure to meet regulatory requirements. The analysis of Small World's FX Pricing and Capabilities Data provides insights into the pricing changes in the company's final month of operation. The pricing for the market remained relatively stable over the month prior to the company's closure, but Small World's pricing was significantly above average for all payout types in its final month.
The return of money to customers is a priority for the administrators, who aim to return the owed funds "as soon as possible." This will occur following a review of all books and records. It's worth noting that Small World Financial Services is the second major money transfer company to cease trading this year, following Sigue, which was ordered to cease activities in March due to its declining financial position.
Lucy Ingham, the author of this article, can be found on LinkedIn for further discussions and insights. For a definitive explanation of the events leading to Small World Financial Services' special administration, consulting official statements from the company, UK regulatory announcements, or relevant insolvency practitioners’ reports would be necessary.
[1] [UK regulatory announcement regarding Small World Financial Services special administration] [2] [Official statement from Small World Financial Services regarding the special administration] [3] [Report from relevant insolvency practitioners regarding Small World Financial Services] [4] [Detailed analysis of Small World Financial Services' financial statements] [5] [Industry report on the state of the money transfer market]
- The financial troubles of Small World Financial Services, as evidenced by their administration, have raised concerns within the industry about the stability of the money transfer business.
- The administration of Small World Financial Services underscores the complexity of managing a business in the finance sector, particularly in times of financial uncertainty.
