Money elsewhere in the group may not be available to this company

The group balance looks comfortable

Imagine two related companies share an owner. One has overdue suppliers and very little cash; the other holds money needed for its own upcoming costs. A combined spreadsheet shows a positive bank balance. That total does not explain what resources are actually available to the company under pressure or what a transfer would mean for either business.

Focus advice on the actual company

ASIC describes insolvency in terms of a company being unable to pay debts when due and recommends qualified advice when that concern arises. Bring the separate entity positions to the adviser. Do not assume common ownership allows money to be moved freely or that a consolidated balance establishes the ability of each company to meet its obligations.

Source: ASIC: Insolvency for directors

Separate the underlying records

Prepare bank balances, creditors and expected receipts by legal entity. Identify shared costs and amounts recorded as owing between the companies. Keep account names and dates visible. If bookkeeping has mixed transactions, explain the uncertainty to the accountant rather than allocating everything retrospectively in whichever way makes the troubled company's position appear stronger.

Describe the proposed support precisely

State which company might provide funds, the proposed amount and timing, and whether any terms or approvals exist. A director's intention is different from a completed, properly assessed arrangement. In the hypothetical example, show the second company's own payment commitments as well. Its available bank balance should not be presented without the demands already placed on it.

Get the transfer assessed before acting

Ask the relevant accountant, insolvency specialist and legal adviser about the proposed arrangement and both companies' positions. Explain existing loans, security and any concerns about ownership of the money. Avoid undocumented transfers or backdated entries. The purpose of the review is to understand a lawful, supportable option rather than to disguise a shortage in a group total.

Update the immediate decision record

Show whether support remains proposed, has been approved on identified terms or has actually become available. Keep any remaining conditions visible. CRP can help assemble the commercial information for the professional review. Separate records let the discussion address the company that owes the debts while considering the real consequences of support from another entity.