Accountant Connect - Insolvency
When is a company insolvent?
- A company is insolvent if it is unable to pay all its debts when they fall due and payable from funds currently available, i.e. cash flow issue
- This is regardless of whether the company has a surplus of assets over liabilities and would, given time, be able to meet its commitments
- Directors have a duty to cease incurring debts when there are reasonable grounds to suspect the company is insolvent
The relevance to you and your client
For your client
- By helping your client in the early identification of the signs of insolvency, the director’s personal liability can be addressed and managed
- Timely action can help to preserve company and director’s personal assets and protect the position of stakeholders
For you as an accountant
- You can mitigate your risk as an advisor, protect your fees and potentially expand your services
- The information already available to you may help provide early indicators of insolvency: e.g. outstanding statutory and superannuation payments, negotiating instalment agreements with creditors, your access to the company’s ATO portal, preferred creditor payments, arrears in accounting fees, etc
Why work with PPB?
- (In)solvency is a critical concept for directors and their advisors – PPB has the knowledge, experience and expertise to guide you and provide unique, ethical solutions
- Our Solvency Checklist can help you and your clients identify early signs of insolvency
- We can provide initial interviews with no obligation or charge and a range of formal and informal solutions to assist you and your clients
- PPB is one of Australia’s leading independent Strategic and Advisory practices with a national team of 28 partners and over 200 staff providing unique and imaginative solutions in our specialised services areas:
