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North Sydney
Phone: +61 411 794 879

Profit maximisation package

If you continue trading and are unable to pay the debts when they come up, then as a director of your company there may be other actions taken against you personally!
  • By speaking with one of our accountants, you can take back control over your finances and discover new opportunities for growth.
    We offer expert advice to help businesses get on track so they don’t face economic downfall or bankruptcy; we also provide personalized service that is tailored just for each client’s unique situation!

    trading at a loss is never an option if you want to keep your business running smoothly. It’s important that we cover the ins and outs of insolvent trading so please read through this information carefully, as well as any other questions which may come up for now or later on down the line!

    What is Insolvent Trading?


    Insolvent trading is when directors allow their company to incur debts when the company was insolvent. The liquidator can make a compensation claim against a director if those debts are unpaid when the liquidation commences. A director may be held personally liable to compensate creditors for the amount of the unpaid debts incurred from the time the company became insolvent to the start of the liquidation.


    When is a company insolvent?


    A company is insolvent when it cannot pay its debts as and when they become due and payable. The Corporations Act defines solvency and insolvency as:

    Section 95A — Solvency and Insolvency

    (1)        A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable.

    (2)        A person who is not solvent is insolvent. A person is defined to include a corporation.

    Is insolvent trading an offence?


    Yes. Insolvent trading is an offence and can be referred to ASIC for further investigation and possible criminal prosecution. Directors should seek legal advice. Section 588G (Director’s duty to prevent insolvent trading by company) stipulates:

    (3)        A person commits an offence if:

    (a)        the person is a director of the company when it incurs a debt; and

    (b)        the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and

    (c)         the person suspected at the time when the company incurred the debt that the company was insolvent or would become insolvent as a result of incurring that debt or other debts (as in paragraph (1)(b); and

    (d)        the person’s failure to prevent the company incurring the debt was dishonest.

    Can directors be liable for company debts?


    Yes, the areas of potential liability are:

    • insolvent trading compensation claims
    • unreasonable director-related transactions
    • loss of employee entitlement claims
    • PAYG taxation debts and superannuation contributions
    • personal guarantees.


    How we can help if you need assistance for business rebound?

    With our comprehensive plan, we get things on track. Some of the areas are;




    Set targets for financial performance

    At least annually

    Possible actions:

    • Consider where you want your business to be in the next year and beyond, and set targets in line with that.

    • Incorporate these targets into your strategic plan, key performance indicators and budgets.

    • To help set targets for performance, look at how other businesses in your industry perform through industry benchmarks. You can get some basic industry benchmarks through www.ato.gov.au or your CPA may be able to help you get access to more detailed industry averages.

    • Review financial targets against your strategic plan and operational budgets at least quarterly.

    • Alter targets where market or other circumstances dictate.

    • Consider incorporating non-financial activities in targets, for example measures of throughput, number of sales calls etc.

    • Use visual displays around the work place to ensure all staff are aware of the key targets and progress against those targets.

    Review and analyse financial statements

    At least annually, preferably quarterly or monthly

    Possible actions:

    • Compare key ratios from your financial statements, such as working capital ratio, stock turnover ratio or profit per employee to averages in your industry.

    • Compare performance against financial targets and past performance.

    Review actual performance against budget


    Possible actions:

    • Ask yourself what caused any gap between budget and actual?

    • Consider how best to overcome any problem.

    Undertake sensitivity analysis


    Possible actions:

    • Ask yourself, what if sales dropped 15 or 20 per cent? Or you lost a major customer? Or a major supplier stopped selling to you? What if your best sales staff resigned? Factor answers to such questions into your budget forecasts and risk management strategies.

    Set sales or production targets


    Possible actions:

    • Undertake a break-even analysis to determine what you need to sell before you make a profit.

    Prepare profit and loss budget


    Possible actions:

    • Make sure your budget reflects your strategic and financial targets.

    • Incorporate key findings from your review of your last budget, sensitivity analysis and the break-even analysis.

    • Ensure that budget estimates are realistic and have not been “massaged” to fit a desired result.

    Prepare cash flow forecast

    At least annually

    Possible actions:

    • Have your cash flow forecast show the projected cash flows for each month in the 12 month period.

    • Address any future cash shortages through increasing cash sales, collecting outstanding debts, reducing expenses or through external finance (such as an overdraft facility).

    • If you decide to seek external finance for any purpose, go to your lender as soon as possible.

    Review and update cash flow forecast in light of actual results


    Possible actions:

    • Update cash flow forecast to reflect actual events and monitor ongoing cash position.

    Review interest rates and conditions on your loans


    Possible actions:

    • Look at what other lenders are offering and consider whether you should switch lenders.

    • If considering switching, consider the terms other lenders can offer, not just the interest rate.

    Provide financial statements and budgets to lenders


    Comply with repayment schedules


    Review debt covenants/terms and conditions


    Possible actions:

    • Notify your bank immediately if you are in breach of a covenant.

    • If you are uncertain of your covenants, read your loan agreement or ask your bank.


Why Choose Us

Australian Owned
1000+ Clients
18 Years of Experience
Affordability - understand the importance
Deep Science & Technology Expertise
Resto & Cafe Speciality
Trusted advisor for clients for over 18 years
14 days delivery of business tax returns

What Our Clients Say

The centre management was really satisfied with our business plan, thanks so much for your help. We’re negotiating the terms and conditions at this stage.


Wonderful mate thanks. Will do to all of the above, very happy with your services.

Ben soutter

Love your work

Andrew Waas


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