Reducing Your Business' Risk of Insolvency

BRISBANE, Australia - Aug. 26, 2024 - PRLog -- It's easy to miss the warning signs that can lead to insolvency. These can include:

*Significant below budget performance.
*Substantial increases in fixed costs without an increase in revenues – Fixed costs are costs that you incur irrespective of your business activity level. When fixed costs go up, they have a direct impact on your profitability. If your fixed costs are increasing, such as leasing more space, hiring more people, buying more plant and equipment, but there is no measurable increase in your turnover and gross profit, it might tip you over.
*Falling gross profit margins – Your gross profit margin is the margin between your sales, minus cost of goods sold.
*Funding your business primarily from debt rather than equity finance.
*Falling sales – If sales are falling, it is going to have a ripple through effect on your business, reducing profit contribution and inhibiting growth.
*Delaying payment to creditors – Your sales are good but you don't seem to have enough cash in the business to pay your creditors on time.
*Spending in excess of cashflow – Trying to pay today's expenses with tomorrow's income.
*Poor financial reporting systems – Driving your business with a blindfold over your eyes!
*Growing too quickly – You're making more sales than your business can sustain.
Substantial bad debts or 'dead' stock – Customers who won't pay their accounts and stock that you can't sell.

To learn more and improve your financial position, visit https://mcfillin.com.au/.