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Signs of insolvency

The Australian Charities and Not-for-Profit Commission provide some warning signs of financial difficulties that may lead to charity insolvency.
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The following should be considered in the context of your charity’s circumstances. 

Some warning signs of financial difficulties that may lead to insolvency may include: 

  • Difficulty paying bills for goods and services. 
  • A history of financial losses in consecutive financial periods. 
  • Trouble producing accurate and timely information about your charity’s performance and financial position. 
  • Overdue tax debts (for example, superannuation guarantee contributions, PAYG withholding or GST). 
  • Late payments to creditors that have resulted in stricter credit terms or creditors now requiring cash on delivery payment. 
  • Payments being declined (for example, payments by credit card or cheque). 
  • Loan applications being declined. 
  • Trouble paying staff on time. 
  • Loss of a major income source or significant funding. 
  • Reliance on funding from unreliable, short term or unstable sources. 
  • A noticeable increase in costs or decrease in income compared to budget projections. 
  • Creditors threatening or commencing legal action for unpaid debts. 
  • Board members or staff raising concerns about the charity’s financial situation. 
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Reporting Obligations of Your Charity Part A: Overview and Basic Financial Skills

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