Running a business has its ups and downs, especially when it comes to money. After all, proper finances are fundamental to the overall success and growth of a business, but unfortunately, financial troubles such as insolvency are common.
Insolvency is the state of having more liabilities than assets and being unable to pay debts. This may be temporary financial distress or a longer-term situation that could lead to bankruptcy if it’s not resolved. Here are a few key tips on how to tell if your business is insolvent from the top insolvency lawyers in Sydney.
Cash Flow Concerns
One of the main signs of insolvency is poor cash flow. If your business is financially stressed and there isn’t a steady flow of money coming in, you could be in trouble. Insolvency and bankruptcy lawyers in Sydney often recommend a cash flow test, which checks if a company can meet current and future financial obligations.
It’s also important to look at income and losses to get a better idea of business financial trends. If the losses show no signs of slowing down in the future and your forecasted income isn’t enough to cover basic operating costs, then it may be time to meet with insolvency lawyers in Sydney to explore your options.
Insolvency lawyers at a commercial law firm in Sydney also list frequent borrowing to cover core business expenses as a sign of insolvency. If you don’t have enough money coming in to pay staff and crucial overhead expenses, then it’s probably best to speak with insolvency and bankruptcy lawyers in Sydney.
Creditor Payment Problems
Finally, one other way to tell if your business is potentially insolvent is if you are unable to pay creditors on time and start to receive threats of legal action for unpaid bills. In that case, a commercial law firm in Sydney can help figure out the best plan of action for resolving these issues with creditors.
Speak to the Best Insolvency and Bankruptcy Lawyers in Sydney
As the leading commercial law firm in Sydney, Lancaster Law specialises in insolvency, mediation and estates. If you have questions about insolvency and want to speak to trusted insolvency lawyers in Sydney, please contact us today.