How to Recognise Company Insolvency

It is important to recognise the signs of company insolvency so that you are able to take immediate action so that you can increase the chances of a company turnaround.


Here are some ways on how to recognise company insolvency.


  1. You are paying your employee’s superannuation contributions late

One of the earliest signs of company insolvency is using your employee’s superannuation payments for general company use. This is illegal and could have serious ramifications for company directors if the superannuation is not paid to the employee’s superannuation funds.


  1. Cash on Delivery

If you are struggling financially and you are struggling to pay your suppliers or vendors on time, then your suppliers may put on Cash on Delivery (COD). This can also result in reputational issues for your company.


  1. Books and records are not updated

When a director or owner is experiencing financial difficulties, their priorities often shift to other issues and the company’s books and records get neglected. This can also have serious ramifications for company directors. It is important that your company books are always updated so that you are at all times aware of your financial status at all times.


  1. Poor cash flow

If you are experiencing trading losses, then you will also experience poor cash flow. Poor cash flow can also be an indicator that your company is insolvent.


Have you noticed any of these signs of company insolvency? Then it is vital that you take action immediately to avoid the chances of being held personally liable for payments and to increase the chances that your company can continue trading.


To speak to a professional insolvency specialists, please contact ISA on 1800 003 883. Our toll-free hotline is opened 24 hours, there will always be someone available to talk to you when you need it most.



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