Some business owners are too busy on the tools to be aware of any troubles brewing or are overly focused on putting out the small fires. Others are oblivious to the seriousness of their financial position or may be in a denial, blame or head-in-the-sand mindset. Whatever the reason, the reality is that many clients are simply not in the best position to see or deal with the problems they’re facing. Because of this, the responsibility passes to you. Swift honesty around financial matters from both sides is critical. As soon as you suspect a client may be in trouble, it’s time to talk. The quicker you do, the better the chances of turning things around.
But when a client is experiencing financial difficulties, at what point is it time to call in a turnaround expert to assist in the situation?
Some warning signs your client’s business is heading towards trouble:
If you have a client experiencing some of the warning signs below, we strongly recommend obtaining independent financial advice. We are always available for a free confidential discussion to assess your clients situation and potential steps to improve their business position, get in touch.
- Reduction in profit
- Incurring losses month on month
- Large contingent liabilities
- Breach of loan covenants
- Inability to produce accurate financial statements
- Under performing finance team
- Unable to renew or denied new
Also you can see our Insolvency Checklist for more detail about financial warning signs.
Working Capital / Liquidity
- Declining free cash position
- Increase in accounts receivables balance and aging
- Increase in accounts payable balance and aging
- Inability to meet tax and superannuation obligations
- High level of turnover in management positions
- Disruption in lower level workforce, union involvement, bullying accusations
- Poor culture
Operations and industry
- Regulatory breaches
- Change in industry funding models, i.e NDIS
- Reduction in margins generated by industry services
- Discontinued funding projects