Review the first family advance before asking for a second
Reconcile prior family rescue funding against its stated purpose before seeking another advance.
Corporate Recovery Partners
01 / 06
Another request needs more than the same promise
A relative funded a shortfall last month and the business now needs more money. Before asking again, explain what happened to the earlier advance and why the expected improvement did not occur. Obtain independent advice on the company's position. Repeating that the next job will fix things is not a substitute for showing how the previous funding was used.
Imagine a contractor whose sibling provided money intended to complete a job and collect the final claim. Record the amount received, recipient entity and actual payments funded. Keep the agreement and bank evidence. Do not relabel the original purpose after the event to make the outcome look planned, or assume that a family relationship removes the need for accurate financial records.
business.gov.au recommends clearly identifying cash-flow estimates and their assumptions. Put the earlier forecast beside actual receipts and payments. Explain any delayed claim, additional cost or different use of funds. In the contractor example, the job may have finished but the customer payment remains disputed. That is a materially different situation from the promised prompt repayment.
Ask the accountant and qualified adviser what additional funding would achieve and what remains uncertain. Do not simply extend the repayment date in a spreadsheet while ignoring continuing losses or unpaid obligations. If the company cannot meet debts, obtain insolvency advice before taking more money. A second advance needs its own assessment rather than borrowing credibility from the original decision.
Provide the agreed information about the earlier advance and proposed new arrangement, with appropriate independent advice. Avoid pressure based on the fact they have already contributed. They should not be told that another payment is the only way to recover the first unless a qualified assessment supports that statement and the risks are properly explained.
Document any new arrangement accurately and preserve the original advance's treatment. Do not merge balances in a way that obscures terms or changes expectations without agreement and advice. A clear review of the first contribution helps the family member make an informed decision about further exposure, including the possibility that they choose not to provide more funds.
