Struggling businesses generally show signs of struggling before they fail. The earlier you pick up on warning signs that your company is or may be heading for financial trouble, the more options you have for remedying these issues with a view to saving your business.
It can be confronting but it’s important that you look at your business critically to determine whether your business need some attention or help. We have set out below some of the questions we often ask our clients about their businesses to determine whether they’re in trouble and, if they are, how much trouble they’re in.
| Early Warning Signs | Signs of Financial Trouble | Signs of Insolvency | |
| IRD | Are you behind with your tax payments to the IRD? | Is your company at risk of being reviewed by the IRD? | Are you treating the IRD like a bank? |
|
Creditors Accounts Payable |
Are you struggling to pay your creditors on time? |
Are you struggling to fill your current orders meet new orders because you don’t have the goods in stock and don’t have funds available to purchase further goods? Have any of your suppliers put you on stop credit, threatened legal action, sent your debt to a debt collection agency, or issued legal proceedings against your company? |
Have your key suppliers put your business on stop credit? Has your company failed to pay the amount demanded in a statutory demand? Has your company been served with liquidation proceedings? |
|
Bank Finance |
Do you need to increase your overdraft facility so that you can pay your existing creditors and/or your staff? |
Do you have very limited cash available? Is your bank refusing to extend you further credit or trying to reduce your overdraft facility? |
Have you been unable to raise new working capital? Do you have loans falling due and no way to pay or refinance them? |
|
Performance Balance Sheet |
Are you getting further and further behind financially? | If you’ve spoken to your accountant or your lawyer about your company, did they seem concerned? |
Getting assistance and advice early, before issues get out of control, is invaluable. It’s better to get in the ambulance at the top of the cliff than to have it waiting for you at the bottom.
If you’re worried that your business might be in trouble or you’re after an independent review of your business, get in touch with the friendly team at McDonald Vague. We’re here to help.
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