Insolvency Warning Signs Checklist

Tick any that sound like your business

Answer honestly, based on the last few months of trading. One sign on its own rarely means much; it is the pattern that matters.

• 1. Continuing trading losses The business has been losing money over successive periods, not just in a one-off bad month.
• 2. Persistent cash flow pressure There is rarely enough cash on hand to cover the bills as they fall due, even when sales look reasonable on paper.
• 3. Poor liquidity ratio Short-term debts consistently exceed the cash and other assets that could realistically be turned into cash to pay them.
• 4. Overdue tax and super obligations BAS lodgements, PAYG withholding, GST, or superannuation guarantee payments are late or unpaid.
• 5. Suppliers demanding cash on delivery Key suppliers have cut credit terms, demand payment up front, or require special payments before supplying again.
• 6. Creditors unpaid outside trading terms Bills are routinely paid well beyond their due dates, and the list of overdue creditors keeps growing.
• 7. Special payment arrangements with creditors The business has had to negotiate instalment plans or special arrangements with the ATO or other creditors to hold them off.
• 8. No access to further finance Banks or lenders have declined further funding, or existing facilities are exhausted or at their limits.
• 9. No ability to raise more capital The owners or shareholders are unable or unwilling to put in more money to cover shortfalls.
• 10. Dishonoured payments Cheques have bounced, direct debits have been dishonoured, or payments have been reversed for lack of funds.
• 11. Demands, judgments, or warrants from creditors Creditors have issued letters of demand, statutory demands, court judgments, or engaged debt collectors.
• 12. Incomplete or out-of-date financial records The business cannot quickly produce accurate, timely financial information showing its true trading position.