SIGNS OF BUSINESS INSOLVENCY

There is no certainty that the business in which you had put your heart and soul will flourish again, so it’s better that you are aware of the signs of financial distress. As soon as you start noticing them and take corrective actions.

Following is the list of the indications that your business is about to be insolvent, and you are in a dire need of insolvency advice.

Office Aesthetics

The company’s business premise is an indicator of the financial health of the organization. Shabby maintenance, broken furniture, and decaying interior are sure to reflect the financial state of any organization.

Pestering Creditors

Demand notices and reminders about the unpaid bills are clear indicators that the business is not going on well.

Late or no payment to the
Creditors

Difficulty in meeting the financial obligations is a problem that everyone faces but if this problem becomes a daily issue, it’s time to sit back and take notice. It means there is something really wrong with the company’s cash flow and no one really cares about the budgeting. Late or no payments will definitely impact the company’s credit score with long-term consequences in some cases. 

Unpaid staff salaries

There are many cases that many companies not being able to pay staff’s salary on time. However, when they are unable to do so completely this is a clear sign of imminent absolute insolvency. In some cases, even the owner of the company may not receive his salary show the financial plight of the company.

The workers have all the right to take legal action against you for the non-payment of their salaries.

Less cash flow and more losses

Every company has losses this doesn’t mean that the company is crashing, but if losses happen more often then it’s advisable that the management seeks professional help. All the businesses thrive on profits if there is more outflow than inflows it is bound to have a consequence and reflects the poor financial condition of the company.

Maximum Borrowing

Everyone in business borrows money however if your company has availed all the possible credit facilities it is not a positive indication. Once borrowing becomes a habit and a threshold is reached there comes a point when the banks and other financial institutions refuse further credit to the company it is a strong indicator of the financial mess the company is heading into. However, bounced cheques are a positive indicator of imminent insolvency.

If you have any query related to business insolvency in UAE then feel free to call +971 4 4542366 today for a quality consultation or please send an inquiry to info[at]flyingcolour[dot]com.

Please Note: This article was published on 21st March 2021. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.