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When a small business is facing financial pressure, there are a number of complex factors to consider. It’s important that small business owners understand any underlying issues causing the financial pressure.ÌýBy keeping accurate and up-to-date financial and business records, you'll be in a better position to monitor the financial position of your small business and take action if you'rte facing financial difficulty.Ìý

If you're a company director there are three questions youÌýshould ask:

1. Does the company have sufficient cashflow and cash reserves to pay debts when they are due?
2. Am I acting in the best interests of the company and its stakeholders, or am I only acting in my own self-interest?
3. Am I getting the right advice for me and for my company from a professional adviser I can trust?

There are other important issues to consider, which is why it's important to seek advice from a trusted adviser such as a financial adviser, accountant, registered liquidator or lawyer – sooner rather than later.

A company may be insolvent when it cannot pay its debts when they are due. This can lead to serious consequences for the business and company directors.ÌýWhen debts cannot be paid, continuing to trade may not be in the best interest of the company or its stakeholders.

Creditors owed money may consider taking legal action against a company to recover debts. In some circumstances, creditors may also pursue company directors to recover debts. Government agencies, like ASIC and the Australian Taxation Office, may also take action if the law is breached.

More information

For more informationÌývisit ASIC’s Small Business hub atÌý

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