CreditorWatch News Whitepapers
3 mins read

Guide: Safeguarding your business from insolvency

Would you know what to look out for and how to protect your business if a trading partner was at risk of insolvency?  

Economic conditions continue to deteriorate, businesses face the ever-present risk of trading partners becoming insolvent. According to CreditorWatch’s Business Risk Index, the rate of external administrations has dramatically increased after the decline seen during the pandemic and is now back to pre-COVID rates.  

The repercussions of insolvency can be crippling, leading to lost revenue, disrupted operations and potential damage to your company’s reputation. 

To empower business owners and credit professionals in navigating these turbulent waters, we’ve compiled a comprehensive and data-driven report: ‘Safeguard your business from insolvency’, enriched with insights from industry experts, including: 

CreditorWatch CEO, Patrick Coglan 
Australian Institute of Credit Management (AICM) CEO, Nick Pilavidis 
Cathro & Partners Principal, Andrew Blundell 
GM Advisory Services Director, Ginette Muller 

They provide a valuable analysis of the current state of consumer and business confidence, along with practical tips to help your business minimise the risk exposure of insolvency from economic pressures, including proactively managing risk, being aware of early warning signs of insolvency and ways to protect businesses from insolvent customers. 


Download the report for free here.

Insights from the report:
  • CreditorWatch’s CEO, Patrick Coghlan, says insolvency risk management should now be core to business operations, if it’s not already. “FY24 will be difficult for Australian businesses and consumers,” said Coghlan.

    ‘’By September 2023, the full impact of the RBA’s 12 cash rate rises will have been passed on by the banks, and the flow on effect will impact roughly 40% of Australian households that are coming off fixed term onto variable interest rates. This, accompanied by low levels of consumer confidence, leads to an expected increase in external administrations.”

    He continued, “And yet, Australian businesses are incredibly resilient through tough times. Many have invested in technology and automation and trimmed fat from their businesses.” 

     

  • Nick Pilavidis outlines four key areas businesses can actively shape to minimise risk exposure: people, processes, communication, and security. He recommends investing in accounts receivables, collections and risk areas, with a Certified Credit Executive (CCE) where possible, as they achieve better results in safeguarding businesses from insolvency. 
     
  • Andrew Blundell notes that understanding the early warning signs of insolvency can also help credit professionals avoid risk. He explains the signs of cash flow and working capital stress, including deteriorating performance, accounting irregularities, insufficient capital expenditure, dividends exceeding performance and multiple management resignations.

     

  • Ginette Muller discusses the process to undertake if a customer appears to be spiralling into insolvency, in order to protect your business. This includes deciding whether to pursue litigation or negotiation and to ensure your outstanding invoices are paid by this customer. Muller also explains the types of payment agreements to pursue.


As Patrick Coghlan, CEO at CreditorWatch concludes, “There’s a question mark over when certainty will come back to the economy, but with the right tools, businesses can navigate the period ahead and come out the other side stronger”.
 


Want to read more? Downloaded the ‘Safeguard your business from insolvency’ report here.

economic insight finance industry insights insolvency Trade
Sarah Oliver
Marketing Coordinator
Sarah joined the CreditorWatch marketing team in May 2023, bringing with her a strong passion for helping businesses and individuals navigate the intricate world of credit through strategic marketing and effective communication channels.
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