Signs of insolvency

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.