Insolvency Specialists Sydney

Need an insolvency expert? Talk to Jamieson Louttit.

When your business starts to falter and experience financial distress your natural reaction is to clam up and not want to talk to anyone. Unfortunately, this is the exact time that you should be getting in touch with an insolvency expert and discussing your options. If you leave things too late then insolvency may be forced upon you by the courts or by one of your creditors.

When are you insolvent?

The corporations code defines solvency as the situation when an individual or company is in a position to repay their debts when they become due. An insolvent person or company is therefore an individual or company that is not solvent. Therefore, if you are not solvent then by definition you are insolvent.

The usual quick test to determine solvency in a company is to look at the liquidity ratio's, specifically the current ratio and the quick ratio. The ratio is calculated by dividing current assets by current liabilities. If this ratio gives you a figure of less than 1 then you should be taking further investigations to determine your businesses solvency. The quick ratio will give you more of an indication of your businesses ability to repay it's debts in the short term. The quick ratio is calculated by adding your cash and cash equivalents to your debtors and then dividing this by your current liabilities. Once again, if you end up with a figure that is less than 1 then you should be taking further steps to investigate your financial position.

What to do if your ratio's look bad

The first person that you should probably be talking to is your company accountant. You should ask your accountant to put together a cash flow forecast so you can accurately estimate where your business is heading financially in the next few months.

If your position is still looking dire then one option to take is to look at talking to an insolvency expert like Jamieson Louttit at www.louttit.com.au

Jamieson Louttit will be able to take you through the options that are available to your business and can advise you of actions that you can take to get your financial situation under control.

Does it always mean liquidation?

There are many options that are available to you if your business is in financial distress. The worst thing that you can do is to ignore the situation and let it get even more out of hand.

If you act quickly then there may be restructuring options available to you or you may be able to renegotiate with your creditors. Either way, it may be a good idea to get some advice from an expert!

Date posted: 2017-08-31 | posted by: 1232blog

Comments

A lot of people think that there is only one way out, ie, liquidation. In actual fact if you are on top of your finances and notice issues early there are lots of potential actions that you can take.
Date: 2017-08-31 | comment by: Jamieson

There's a really good argument for keeping on top of your accounts. You don't want to leave things 3 or 6 months and then work out that you have a problem.
Date: 2017-08-31 | comment by: Michael

These days with cloud based accounting systems it is really easy to up to date information about where you are at. If you have any concerns then you should be getting advice ASAP.
Date: 2017-09-05 | comment by: Jerry

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