Boston Commercial Services Pty Ltd (ABN 87 114 658 070) CAPI Licence Number 409 456 759

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Key Indicators of Business Success and Warning Signs Part 3

As revealed in our last blog, there are certain warning signs which might indicate that a business will soon struggle to meet their financial obligations. Read on to find out about the last five of the top ten warning signs.

 

6. Sales are decreasing

If trading has been reducing over a period of time, it may mean a company needs to free up some cash to promote its product and/or service, or the company needs to diversify.

Financial advice should be sought to determine the company’s place within the market and identify its strengths, weaknesses, opportunities and threats and to develop a plan for the future.

 

7. Unfunded superannuation

When businesses have been utilising the funds earmarked for employee superannuation contributions, in order to continue trading. Superannuation payments are to be remitted quarterly and are required to be paid within the month after the end of each quarter. In the event the funds are not paid to the respective super funds within the specified timeframe these amounts fall due as a debt due to the Australian Taxation Office, under the Superannuation Guarantee Act. In addition to the debt due, penalties and interest are applied.

 

8. Excessive reliance on related parties

Without any formal loan agreement and/or repayment plan, Companies have been borrowing funds from related entities and/or family members. In the event the Company is wound up, these debts will rank equally with all other unsecured creditors and if insufficient assets are realised, may not receive any dividend.

 

9. Low stock turnover

When a company’s stock is not moving and the majority of stock on hand is extremely old and in some cases, obsolete. This will affect the value of this asset that Companies have recorded on the balance sheet and after adjustment of the stock value, a negative balance sheet position may result.

 

10. High accounts receivable

The debtors of the Company are just not paying and the Company does not have an accurate figure on the total amounts owed or the collectability of those receivables.

A company may need to introduce a more effective debt collection process going forward. Further, an increasing number of SME’s are utilising invoice discounting or other forms of cash flow financing to ensure continuity of cash flow and to streamline the debt collection function.

If any of the listed warning signs appear, financial advice should be sought immediately to make use of any restructuring option still available.

If you would like to learn more about the debt collection services we offer, contact us now. We have over 30 years of experience providing professional and discreet debt collection solutions for clients of all sizes and across all industries. With debt collection agencies in Sydney, Melbourne and Brisbane we have the east coast covered.

Read More:

KEY INDICATORS OF BUSINESS SUCCESS AND WARNING SIGNS PART 2

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  • I have known the principal of the BOSTON Group (Derryn HARRISON) as well as key staff members (including Ben GOWER) for well over 2 decades and have been using their professional services for myself as well as for Powerhouse Logistics Pty. Ltd. on a regular basis, not only in Sydney but on a national basis.

    At all times BOSTON have been extremely pro-active, attentive, courteous and professional with all matters we threw at them. Their advice has always been extremely sound and commercial and I find them to be a "breath of fresh air" within the legal fraternity and have no hesitation whatsoever to highly recommend them.

    Peter Brueckner

    Powerhouse Logistics Pty Ltd (CEO)

  • Expect A Star has worked with The Boston Group for 10 years. In this time we have appreciated the ongoing support of Boston for all of our collection and legal requirements. Like most businesses cashflow is critical to ongoing success and growth, with Boston we have found a partner who are an extension of our business and play a key part in our cashflow management. The Boston Group bring a level of expertise to our business which is valuable and coupled with their excellent customer service we look forward to continuing to work with them for many years to come.

    Ryan Meldrum

    Former CEO

  • I have been using the services of The Boston Group and their legal entity for over 11 years. During this time I have found their service to be impeccable, delivered with the utmost professionalism and integrity. The vast majority of cases that I have placed with Boston were far from straightforward, requiring legal acumen and delicate handling. Having used all methods available without success to procure payment, I confidently placed these matters into their safe hands. In all instances a successful outcome was achieved.

    Mark Parish

    Credit Manager

  • SNP Security has had the pleasure of working with Boston Commercial Services for the past 11 years. Boston has played an integral part in the continuing success of SNP Security’s low DSO’s, 90 Day % Debt & of course Bad Debts Written Off.

    Amanda Griffiths

    National Administration Manager

Boston Commercial Services prides itself in offering specialised, professional services, through a highly experienced team of debt collector, with personalised client attention.