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At What is Liquidation, we commonly hear from directors (business owners) of companies in financial difficulties that they regret that they did not seek professional advice or appointed an Insolvency Practitioner earlier.

So, when is the right time to appoint an Insolvency Practitioner?

As soon as you recognise any signs that your company is facing financial difficulties, this is the time! Warning signs that indicate a company is experiencing financial difficulties:

  • Cashflow problems.
  • Balance sheet shows a negative position.
  • Overdue taxation liabilities (i.e. GST and PAYG).
  • Trading losses or declining sales.
  • Outstanding trade creditors past trading terms.
  • Unpaid rent to landlord or unpaid lease payments to leasing company.

   To name a few….

By appointing or seeking advice from an Insolvency Practitioner when you first realise your company is facing financial difficulties, you will have taken the necessary initial step to sort out the poor financial position of the company.  

The ‘sooner rather than later’ rule applies here as by NOT appointing an Insolvency Practitioner, if the company continues to incur new debts, then directors can be held personally liable for these new debts, so the sooner you appoint the less likely you are going to expose yourself personally.

However, it is a natural reaction for directors or business owners to try to trade their way out of financial difficulties, but the sooner you benefit from an expert’s experience and industry knowledge, the better your chance of survival.  

If a company is experiencing financial difficulties this doesn’t necessarily mean the company will have to cease trading as there may be a strategy to deliver restructuring and turnaround solution. An Insolvency Practitioner is better equipped to provide advice of how to deal with financial difficulties and whether it is the right time to consider a formal insolvency appointment such as Liquidation or continue trading.

The sooner directors seek advice from an Insolvency Practitioner the more options are available. If it’s left too late, Liquidation may be the only choice.

Don’t bury your head in the sand…insolvency for directors is something that should be taken seriously and actioned upon quickly. Find out about our available solutions for you today!