There are less than 40 days until several stimulus measures come to an end including the insolvent trading moratorium, temporary increase in the statutory demand threshold, the first tranche of JobKeeper 2.0 and for some states, the commercial eviction moratorium.
Business recovery and insolvency firm, Jirsch Sutherland is urging business owners to do a health check to identify any red flags such as poor cash flow, an inability to pay bills, staff wages or superannuation, loss of clients, high staff turnover, special payment arrangements with creditors, substantial bad debt write-offs and an inability to access finance.
Jirsch Sutherland national managing partner, Bradd Morelli said it is vital that businesses don’t ignore the warning signs of insolvency – otherwise they could miss the window to take corrective action.
“Directors could retrospectively be personally liable for insolvent trading from when the temporary COVID-19 Safe Harbour changes to the Corporation Act came into play on March 25 this year. It’s crucial that business owners and directors understand that while it might not be their fault that their business is in trouble, it is their responsibility.”
Early intervention from a qualified and independent advisor could mean the difference between turning a business around or going into liquidation, according to Morelli.
“By recognising the signs your business is in trouble and acting on them early, you could give your business the best chance of survival or to wind it up with minimal losses and achieve the best possible outcome. Working with a business recovery/insolvency specialist also means that if you have been trading while insolvent, the matter will be handled in a controlled manner, mitigate risk and prevent against subsequent action once the insolvent trading moratorium ends.”
Advice from Jirsch Sutherland is to act quickly, speak with an accountant or business recovery/insolvency specialist, meet with management, identify the reasons for the warning signs, review your financial position and prepare a strategy.