When should directors get insolvency advice?

Waiting for annual accounts is delaying a necessary discussion

A marketing agency director notices that tax is overdue and two suppliers have stopped extending credit. The director plans to wait for year-end accounts before discussing insolvency because the business still has clients. Another payroll is approaching. Waiting for a perfect reporting date may leave less room to understand the position and respond.

Use current triggers, not the annual calendar

Look at actual missed payments, formal notices, unavailable finance and reliance on uncertain receipts. Ask whether the company can meet obligations as they arise, including those created by new work.

ASIC recommends qualified advice as soon as a director suspects due debts cannot be paid. That does not require the director to establish a final legal diagnosis before asking for help.

Source: ASIC — Insolvency for directors

Bring an imperfect but honest picture

Gather bank balances, creditor and debtor lists, tax accounts and major contracts. Mark missing records and estimates clearly. Do not delay a first discussion because one reconciliation is unfinished.

Explain urgent dates at the start, including hearings, demands and payroll. The adviser can then distinguish immediate action from information that can be completed afterwards.

Ask questions about decisions

Ask what can safely be concluded from the current evidence, what needs checking and what options merit assessment. Explain proposed orders, asset sales, repayments and funding changes before implementing them.

Clarify the adviser’s role, qualifications, scope and fees. A useful consultation should leave you with concrete information requirements and next actions, not just a reassuring general description of a process.

Keep the assessment current

Assign responsibility for each follow-up item and record the agreed review date. Update the adviser if a major customer fails, a creditor changes position or funding is withdrawn.

Advice based on last week’s assumptions may need revision. Early help is most useful when directors continue to provide accurate information and act on the decisions required.

Seek advice while decisions can still be examined

Act on current payment concerns rather than waiting for year end.

Bring available records and clearly identify gaps.

Leave the meeting with specific actions, owners and review dates.

Call CRP today to coordinate timely access to qualified insolvency advice.