By Liam Bailey, Managing Partner, O’Brien Palmer
Most business owners don’t avoid financial problems because they’re careless. They avoid them because it feels personal. When you’ve poured years of work, money, sacrifice and stress into a business, it’s hard to separate the business from your identity.
As Liam Bailey, Managing Partner of O’Brien Palmer Advisory and Insolvency Management, says:
“The concept that that business might be failing isn’t just a failure of the business in a lot of directors’ minds. It’s the concept of it being a personal failure on their behalf.”
That shame is often what delays the most important step… Getting help early.
Early advice creates more options
A lot of people assume speaking to an insolvency professional means the business is already finished. This just isn’t true.
“The entire insolvency system is first and foremost designed around saving businesses.”
The earlier you seek advice, the more options are usually available.
You may still have cashflow to work with.
You may still have goodwill with suppliers.
You may still have time to restructure, negotiate or turn things around.
But once a creditor is filing a wind-up application in court, many of those options may already be gone.
Solvency is about cashflow
One of the biggest misconceptions business owners have is thinking they are solvent because they have assets.
Whereas this isn’t the case, Liam explains it simply:
“Solvency is a function of your ability to pay your creditors as and when debts become due and payable.”
It is not just what you own on paper. It is whether you can pay your debts on time.
Warning signs include:
- overdue creditors blowing out
- falling behind on GST, PAYG or superannuation
- maxing out credit
- relying on one payment to fix everything
- not paying yourself properly
And Liam’s blunt reality check is worth remembering: “If your business can’t afford to pay its creditors, then it can’t afford to pay you.”
Hope is not a turnaround strategy
Business owners are naturally optimistic. But optimism can become dangerous when it replaces the numbers. Waiting for one payment, one client, one good month or one miracle can leave the business sitting on a fragile foundation.
As Liam puts it: “The house of cards on which everything was resting comes crashing down because of a missed payment from a customer.”
That is why regular cashflow reviews matter. Numbers do not care about hope. They show what is really happening. And as the business or person advising a business owner, you need to be across this data.
Accountants and bookkeepers can spot the warning signs early
Accountants and bookkeepers are often the first people who can see when a business is under pressure.
They see the unpaid creditors.
They see the tax debt.
They see the cashflow stress.
But those conversations can be uncomfortable and avoiding the hard conversation helps nobody. If you are the accountant, a direct conversation, backed by a file note, can help protect the client, the business, and yourself as the advisor.
Transactions need supporting documents. Invoices. Tax calculations. Employment records. Supplier records. Evidence that explains what happened and why. If proper records are not maintained, directors can face serious exposure if the company later enters liquidation.
The real question
Every business owner should regularly ask: Is this business able to pay its debts? And is this business paying me properly for my time, risk and energy?
Because spending years keeping a business alive without making money is not success. It is survival.
Financial pressure may not always be your fault. Markets change. Customers slow down. Costs rise. Industries shift. But avoiding the truth only reduces your options.
As Liam says: “The earlier you get involved once issues are identified, the more options that are available and the better prospects of coming out the other side.”
If your business is under pressure, get advice early. That conversation could make all the difference. And as always, we at O’Brien Palmer are very happy to have a confidential, no-fee conversation to see if we can help you and your business before it’s just too late.
Liam Bailey, Managing Partner
O’Brien Palmer
📞 (61) 2 9232 3322
📧 obp1@obp.com.au
Video Credit to Bianca Basilio from AI Apex Automations.
Bianca interviewed me for the Ledger Podcast, and allowed us to condense it for our OBP Small Business Resources series. If you’d like to see the full version, please go to: https://youtu.be/M_BVWTmd9_k?si=J0V9tC_T1BiACOZH