As a business owner, insolvency is the last thing that you would like to face. But sometimes it’s quite easy to miss the signs of the approaching danger. Needless to say, insolvency can lead to serious consequences. If you feel that your business debt is reeling out of control, you need to take immediate action and try to bring back things on track. But before you can do that, you have to determine whether your business is actually insolvent or not. Outlined below are a few ways through which you can check if your company is insolvent or is in danger of treading the insolvency path.
Assess your bills
Start by checking your bills. See if your bills are being paid on time or not. Ideally, all your bills should be paid on or before the due date. If you notice that your bills are being paid late, it should be reason enough to ring the warning bell for you. It can be a clear indication that there is a problem with the cash flow of your business. Even if the payment of your bills is delayed by a few days, you must look into the issue and try to find out the cause and rectify it. In other words, late payment of bills on a regular basis can mean that your business may be insolvent.
Add up your assets and liabilities
Your assets and liabilities can act as an effective means to determine the monetary well-being of your business. Add up your business assets and liabilities separately and then compare them. If your business owns more than it owes, then you may still be in safe waters. But if you find that your business assets are unable to cover the liabilities, chances are that your business has already hit the waters of insolvency.
Are your creditors taking you to court?
When one or more creditors move court against your business to recover their dues, it can definitely mean trouble for your business. Such an action clearly indicates that your business or company is not in a position to pay the creditors the amount due. Simply put, it means that your business is insolvent.
What to do in case of insolvency?
If it becomes apparent that your business is insolvent and there is no way to get out of the crisis, you have to act quickly and prevent the situation from worsening any further. This is where an insolvency advisor can come to your rescue. Your insolvency advisor can help you to chalk out your course of action.
Now the question is: does your business need advice on insolvency only? No, you need to do more. Though you need to deal with insolvency first, you have to think about recovery and turnaround as well. An experienced insolvency practitioner can help you on all these counts and more. So, when faced with insolvency, reach out to a skillful insolvency adviser as soon as possible.