About 10,000 Australian businesses each year appoint an external administrator. According to ASIC that figure has doubled since 1999, although 2008-9 was the worst year by far. Often companies get into trouble because of cash flow. You can run as a profitable business on paper, but that means nothing if you run out of money.
Rob Lamers is the CEO of Oxford Funding (part of the Bendigo Adelaide Bank). In this edition of BTalk he talks through the seven warning signs that your business is heading for financial distress:
- Margin erosion
- High gearing
- Under capitalisaiton
- Unknown cash flow
- Struggling to pay creditors
- Always looking for new loans or fresh capital
Have a look at your business and honestly ask yourself whether any of these are areas of concern. You don’t want to be another ASIC statistic.