Having a client in financial trouble is no fun for anyone. More often than not, they have their head buried in the sand and have little to no understanding of the gravity of the situation in which they find themselves. They ‘put off’ having to deal with their declining financial circumstances, which quite often leads to deeper debt and less empathy from their creditors.
A question we are often asked is, “when is the right time to reach out to your trusted insolvency practitioner?”
In order to help practitioners triage their struggling clients, we have put together a checklist of indicators to look out for:
- The clients are in a current climate “risk” category such as:
- Building and construction
- Accommodation & food services
- Retail trade
- Transport, postal & warehousing
- They are currently trading at a loss or you have witnesses continued losses over various periods;
- Statutory creditors not being paid on time i.e., State and Commonwealth taxes such as GST, payroll tax and land tax; employee superannuation, wages and/or leave entitlements;
- Creditors being paid past contract / agreed / normal industry terms;
- Suppliers placing them on a Cash on Delivery arrangement or demanding special payments before resuming supply;
- Cheques have been returned dishonoured or EFTs have ‘bounced’;
- Cheques are being issued but not sent or are being post-dated;
- Payment demands being received from solicitors or judgments for unpaid debts being sought;
- Accounting records are not kept up-to-date and / or are hard to find when asked;
- Clear avoidance from your client to simple requests, and / or emails from you are not being responded to in a timely manner;
- Change in client behaviour in dealings with your office;
- Changes in employee status – understaffed and over-stretched;
- Overdraft limit being exceeded on a regular basis;
- Non-payment or delay in payment of rent / lease; and /or
- Limited or no access to alternative funding / finance.
If any of your clients are experiencing a number of the above, it may be time to have a chat with a trusted and registered insolvency practitioner who can review and discuss the alternatives available to your client.