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How does a director know if their company is insolvent?

18 April 2022 Communications & PR Executive Abigail Cheadle e: abi@mcorpadvisory.com.au d: +61 448 139 340 m: +61 448 139 340
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Can you pay your debts as and when they fall due? If not, your business is trading whilst insolvent.

We’ve taken care to explain the risk of trading whilst insolvent – but how will a director know if their company is actually insolvent? “Insolvent” has a technical accounting meaning, which may require you to prepare forecast profit & loss, balance sheet and cash flow statements on a incremental basis for an extended period of time to establish whether you are able to pay your debts as and when they fall due. But here are the warning signs that should lead you to consult with an expert to find out for sure:

  • Creditors are constantly chasing for payment, or sending demands or winding up notices.
  • You are not able to pay suppliers on respective trading terms.
  • Suppliers have stopped credit and you must now pay cash on delivery.
  • You worry about how you will be able to pay everyone.
  • You need to check the bank balance every morning so you can work out which creditors to pay.
  • You are behind in your BAS or ATO lodgements.
  • You have fallen behind on your ATO payment plan.
  • There’s not always enough money to pay yourself a regular wage- you might even be putting money back into the business.
  • Your bank has turned you down, cut your credit limit, bounced your cheques, or told you that they want to appoint an ‘investigative accountant’.

If you or anyone you know is experiencing the above, please consult with www.safeharbournet.com.au who can arrange an appointment with one of their experienced turnaround specialists.

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How does a director know if their company is insolvent?

18 April 2022 Abigail Cheadle e: abi@mcorpadvisory.com.au d: +61 448 139 340 m: +61 448 139 340

Can you pay your debts as and when they fall due? If not, your business is trading whilst insolvent.

We’ve taken care to explain the risk of trading whilst insolvent – but how will a director know if their company is actually insolvent? “Insolvent” has a technical accounting meaning, which may require you to prepare forecast profit & loss, balance sheet and cash flow statements on a incremental basis for an extended period of time to establish whether you are able to pay your debts as and when they fall due. But here are the warning signs that should lead you to consult with an expert to find out for sure:

  • Creditors are constantly chasing for payment, or sending demands or winding up notices.
  • You are not able to pay suppliers on respective trading terms.
  • Suppliers have stopped credit and you must now pay cash on delivery.
  • You worry about how you will be able to pay everyone.
  • You need to check the bank balance every morning so you can work out which creditors to pay.
  • You are behind in your BAS or ATO lodgements.
  • You have fallen behind on your ATO payment plan.
  • There’s not always enough money to pay yourself a regular wage- you might even be putting money back into the business.
  • Your bank has turned you down, cut your credit limit, bounced your cheques, or told you that they want to appoint an ‘investigative accountant’.

If you or anyone you know is experiencing the above, please consult with www.safeharbournet.com.au who can arrange an appointment with one of their experienced turnaround specialists.