The important thing is not to wait until the situation becomes critical before seeking advice.
Early advice can make a difference
If your business is experiencing financial pressure, obtaining restructuring or insolvency advice early can help you understand your options and make informed decisions.
Some warning signs that it may be time to seek advice include:
- regularly struggling to pay suppliers or employees on time
- relying on increasing levels of debt or credit to meet day-to-day expenses
- receiving demands or legal action from creditors
- falling behind on tax or other statutory obligations
- experiencing ongoing cash flow problems
- losing a significant customer or source of revenue
- having debts that are becoming increasingly difficult to manage
- directors being concerned about whether the business can continue trading
These signs do not necessarily mean a business is insolvent. However, they are indicators that professional advice should be considered.
Restructuring may provide options
Seeking advice does not automatically mean closing the business.
Depending on the circumstances, restructuring may provide an opportunity to address financial difficulties and improve the business’s position. This could involve negotiating with creditors, restructuring debt, reviewing the business model or considering formal restructuring options available under the Corporations Act.
The earlier the issues are identified, the more options may be available.
Directors should not ignore the warning signs
Directors have important legal responsibilities when a company is experiencing financial difficulties. Continuing to trade when there are concerns about insolvency can expose directors to significant personal and legal risks.
For this reason, directors should seek advice as soon as they have concerns about the company’s ability to pay its debts as and when they fall due.
Don’t wait for a crisis
One of the biggest mistakes a business can make is waiting until there is no money left, creditors are taking action or a statutory demand has been received.
Early advice allows the business and its directors to properly assess the position, understand the risks and consider the available options.
If your business is experiencing financial pressure, the team at Madgwicks can provide practical advice on restructuring, insolvency and the options available to your business.
The information provided in this article is general in nature, cannot be relied on as legal advice and does not create an engagement. Every business is different and appropriate legal and financial advice should be obtained before implementation. Please contact one of our lawyers listed for advice about your specific situation. Output from ChatGPT and OpenAI on 27 August 2026 reviewed and updated by Madgwicks Lawyers prior to publication.
