Seven Early Warning Signs of Business Financial Distress

Averden Advisory · Editorial perspective

Financial distress rarely arrives without warning. The signs usually appear months earlier, in the numbers and in the day-to-day running of the business.

The seven we see most often: persistent cash shortfalls, stretching supplier payments beyond agreed terms, missed or delayed tax payments, falling gross margins, growing reliance on an overdraft or director loans, delayed management accounts, and key staff leaving.

Any one of these can have an innocent explanation. Several together suggest the business needs an objective review of its position and options.

Acting early matters because options narrow as pressure grows. A business that reviews its position at the first signs has far more room to manoeuvre than one that waits for a winding-up threat. This article is general information, not personalised advice.

This article is general information and is not legal, financial or insolvency advice. Please seek advice on your specific circumstances.