Your debt comparison treats every contingent claim as already payable

The headline debt total combines unlike items

You compare business value with a liability list containing invoices, a threatened claim and a guarantee that has not been called. The combined figure is alarming, but its components need explanation. Give the accountant and insolvency adviser a transparent schedule rather than removing uncertain items or presenting every maximum exposure as money already due today.

Show the basis for each amount

Record the legal party, document, amount claimed, current status and any event said to trigger payment. Distinguish the creditor's demand from your estimate. Keep disputed and contingent matters visible with their supporting correspondence. Do not decide that a claim has no value because you disagree with it, or that a contractual ceiling is necessarily the amount ultimately payable.

Keep the insolvency question properly framed

ASIC describes company insolvency by reference to the ability to pay debts when due. Ask advisers how the different obligations should be assessed in the actual circumstances. This article does not give a rule for recognising provisions, valuing contingencies or deciding solvency. Its purpose is to make the factual inputs understandable so qualified advice is not based on an unexplained aggregate.

Source: ASIC: Insolvency for directors

Consider a hypothetical maximum exposure

Imagine a company list includes an unpaid supplier invoice and the maximum amount of a disputed contractual indemnity. No assessment has been made of the indemnity trigger or likely amount. Provide the contract and claim history alongside the figures. A proper review may require scenarios, but the director should not invent a probability or silently assume the maximum is either certain or irrelevant.

Build scenarios with clear labels

Where advisers recommend alternative cases, identify the event and timing assumed in each. Keep the cash forecast linked to those assumptions without overwriting the base records. Explain whether a settlement discussion is merely proposed. Different scenarios should help expose uncertainty, not disguise a commitment that has already become payable or create a falsely precise liability estimate.

Update the status as evidence arrives

Record demands, decisions, settlements and payments promptly and obtain advice where they alter the assessment. Retain the earlier schedule so changes are traceable. The useful outcome is a debt comparison that shows what each figure means, allowing business value, payment timing and potential exposure to be considered without confusing them into one unsupported conclusion.