How Do I know If My Company Is Insolvent?

 

 

 

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How do I know my company is insolvent? The first thing to understand within the topic of insolvency is what insolvency actually is. And there are two key tests for this. The first test is a cash flow test, and this is simply can you pay the debts and liabilities when they become due? A simple, practical way to understand this is are you continually being chased for debts? Have you got threats of court action? Do you have a looming, winding up petition?

The second test is what we call a balance sheet test. And this is simply a question as to whether your total liabilities outweigh your total assets. And if the answer is yes, then your company is facing insolvency. So we understand that this is a complex topic and this needs to be looked on at a case by case basis, and we fully understand that this is a great cause of concern for you. But the most important thing you can take when you're facing insolvency is to take action early.

So if you want a confidential, impartial discussion as to whether your business is potentially insolvent, contact the Real Business Rescue team today for a free initial consultation.