Steering clear of insolvency

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Running Time: 9:54

Date: 01/05/2014

Ignoring the early signs of insolvency in your business could lead to personal liability.

It's an offence to continue trading a business when it's insolvent, and failure to act early can have personal ramifications for directors. Narelle Ferrier, Technical Director of the Australian Restructuring, Insolvency and Turnaround Association, says look out for early warning signs and seek advice from an accountant if you're concerned.

Narelle warns that delaying payments like GST, PAYG and super could signal to the ATO that your business is in distress. Try not to rely on a small group of customers to generate the majority of your revenue, she advises. And it's not just your own cash flow you need to be aware of. Changes in payment terms by a supplier could indicate they're having difficulties - and that's a red flag if you've come to rely on them.