It’s bad news for Australian businesses as it is predicted that the number of insolvencies will increase this year.
According to Atradius Economic Outlook, there will be a 2% increase in insolvencies, meaning that Australians will be on par with the UK and Canada.
In order to avoid being part of the 2% of Australian businesses becoming insolvent, make sure that you keep a close eye on your business’ performance and cashflow. Also, learn to recognise these signs that your business is insolvent or likely to become insolvent.
- You cannot pay your debts
Being insolvent is defined as being “unable to pay your debts as and when they fall due” so if you find that you are struggling to pay your bills one time, then you may already be insolvent.
- Not paying superannuation fees
One of the first go-to sources of money for companies who cannot pay their bills is the employees’ superannuation. This is because these payments are only made quarterly so missed or late payments may go unnoticed.
Whilst not paying your employees’ superannuation will help to improve short-term cash flow, it is not solving the core problem of your company’s underlying financial situation. Directors who fail to pay their employees’ superannuation will also become personally liable for the unpaid superannuation.
- COD terms
If your suppliers and vendors are starting to put implement Cash-on-Delivery, then that demonstrates that your suppliers have acknowledge of or suspect that your company is insolvent. If others are starting to recognise it, then you should act immediately and seek professional help.
CRS Insolvency Services are the leading corporate insolvency specialists in Australia. We offer 24/7 expert advice on our toll-free helpline. If you would like to speak to a professional, then please call us on 1800 210 073.