Reconcile related-party balances before an SBR assessment

The ledger total may leave questions unanswered

When you ask about small business restructuring, a quick creditors report may not tell the whole story. Director advances, intercompany balances and disputed invoices can sit in separate accounts. Prepare those records for the practitioner rather than deciding yourself that an inconvenient amount does not count because it is owed within the group.

Trace how the money moved

Imagine a building company funded by several transfers from its director and a related equipment business. One transfer was entered as income and another as a loan. Collect the bank records, agreements and accounting entries. Ask the accountant to explain the treatment and identify corrections, keeping a clear record of what changed and why.

Leave the eligibility calculation to the practitioner

ASIC says total company liabilities must not exceed $1 million on the appointment date. How the rules apply to a particular balance needs assessment. A liability should not disappear from the information pack simply because the related creditor says they are happy to wait. Disclose the arrangement and ask how it should be treated.

Source: ASIC: Small business restructuring and the restructuring plan

Show both sides of disputed amounts

Include the amount claimed, the amount recorded and the reason for any difference. Attach the correspondence supporting your position. For an intercompany account, check whether the other entity's records agree. A one-sided adjustment made to reach a desired total can conceal a problem the practitioner needs to understand before giving advice.

Explain later transactions

Date the report and identify movements since it was prepared. If the director advances more money to cover payroll, provide the new transaction and its terms. Do not keep using an earlier total because it was below a threshold. The assessment needs a reliable view of the relevant position, including developments during preparation.

Ask what remains unresolved

Finish the meeting with a list of missing agreements, unreconciled balances and questions for the accountant. Assign an owner to each item and return the evidence promptly. The aim is not to make the company look eligible on paper. It is to give the practitioner enough accurate information to assess whether this process is available and appropriate.