Signs that your company is in financial difficulty include ongoing losses, poor cashflow, unpaid creditors outside usual trading terms and problems obtaining finance.

If you receive an S222AOE penalty notice from the Commissioner of Taxation for your company’s unpaid tax, you should immediately seek professional advice. Failure to take appropriate steps within 14 days may result in the Commissioner taking recovery action against you personally for an amount equivalent to the unpaid tax.

Signs that may indicate your company is in financial difficulty are:

• Ongoing losses
• Poor cash flow
• Absence of a business plan
• Incomplete financial records or disorganised internal accounting procedures
• Lack of cash-flow forecasts and other budgets
• Increasing debt (liabilities greater than assets)
• Problems selling stock or collecting debts
• Unrecoverable loans to associated parties
• Creditors unpaid outside usual terms
• Solicitors’ letters, demands, summons, judgements or warrants issued against your company
• Suppliers placing your company on cash-on-delivery (COD) terms
• Issuing post-dated cheques or dishonouring cheques
• Special arrangements with selected creditors
• Payments to creditors of rounded sums that are not reconcilable to specific invoices
• Overdraft limit reached or defaults on loan or interest payments
• Problems obtaining finance
• Change of bank, lender or increased monitoring/involvement by financier
• Inability to raise funds from shareholders
• Overdue taxes and superannuation liabilities
• Board disputes and director resignations, or loss of management personnel
• Increased level of complaints or queries raised with suppliers
• An expectation that the ‘next’ big job/sale/contract will save the company