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Tell-tale signs your business might be in trouble

Sometimes you just have to ask some curly questions of yourself about your business. It’s easy to travel on as you always have completely unaware that your business is not doing as well as it should be. – Paraphrased from an article by Philip King 18 May 2022

Are you attempting to get a loan from a non-standard loan source? Are you unable to get get finance from a bank easily, or is your mortgage broker pointing you to the expensive interest rates deals to get that loan you need over the line? The banks can often sniff out a risky investment sooner than you will notice yourself. If this is you, might be time to ask why the banks are giving you a hard time.

Are you taking longer to pay your bills? Have you gone from paying within 7 days to now taking over 30 days? You may have found you have spent all your working capital keeping things afloat as customer payments are not keeping up with the bills coming in.

Are your suppliers being difficult with you? Now this might be a sign of the supplier being in trouble themselves – but if your supplier won’t allow you to keep on trading with your normal terms of trade such as 30 days – and have moved it to 7 days or cash on delivery – this certainly will impact your business cash flow but also may signal that you have allowed your accounts to get too large for your suppliers comfort.

Are you washing sales money from one customer to finance the completion of a job for a prior customer? This is a stark sign that you have spent all your working capital and are on ‘borrowed time’

Is your rent behind? The biggest lesson I cannot speak of strongly enough is to ensure you do not breach any condition of your rental agreement. Commercial tenancies do not have much leniency when it comes to tenants getting behind and I have met more than one business owner who arrived at work in the morning to find themselves locked out of their business.

Are you paying your staff on time and paying their superannuation on time? Wage theft is a real thing these days – and the penalties for failing to pay your staff’s super on time are huge. If you cannot fund staff’s wages you should be considering reducing the amount of staff until you can. You may need to contact fairwork to ensure you do this correctly (legally) so you do not end up in even more hot water.

Are you behind in your BAS, and tax payments to the ATO? The Australian Taxation Office is now aggressively pushing to get all lodgements and payments up to date as they need to claw back some of the monies generously given out in BOOST and Job Keeper payments. Directors have been put on notice that they will be personally liable for any ATO debts for their companies – and companies seriously behind in payments and lodgements will find themselves being asked to be wound up.