What to do if you are in financial difficulty

RSM - providing person insolvency, bankruptcy and corporate insolvency solutions
RSM - providing person insolvency, bankruptcy and corporate insolvency solutions

Your cash flow has dried up. You have mounting debts. You aren’t sure if the government will provide more support. You don’t know what to do next. Your stress-levels are through the roof.

If you are facing financial difficulty, you’re not alone. Statistics show us that in the last 10 years there have been more than 163,000 personal bankruptcies and more than 85,000 corporate insolvency appointments in Australia.Financial difficulty isn’t a new, or uncommon challenge, but it's certainly a situation that takes its toll on individuals and their families, and other stakeholders, such as creditors and suppliers.

Financial difficulty isn’t a new, or uncommon challenge, but it's certainly a situation that takes its toll on individuals and their families, and other stakeholders, such as creditors and suppliers.


This month the spotlight is on Neil Cribb, RSM Partner, Restructuring and Recovery (R&R), who has worked as part of the RSM team for 35+ years, 30+ of those in the R&R team.

He has helped people turn their businesses around after experiencing financial difficulty, and also navigated countless individuals and corporations through the bankruptcy or insolvency process. Neil shares with us his tips for what to do if you or your clients are experiencing financial difficulty now.


1. Take the first step - put your hand up for advice

“It’s a very big deal to put up your hand and admit you are, or may be heading towards, financial difficulty - we understand that. In my experience, that tends to be one of the hardest things for people to do.

Going it alone, really isn’t a good approach though, from a financial or a mental health perspective. Conversations are confidential - so there is no harm in getting some independent advice sooner than later.” Neil said.

“Looking over the horizon with a trusted professional, can assist in identifying a cash flow problem before it becomes an immediate issue.

We may have options for you to consider that you aren’t currently aware of.  Being informed tends to take some of the pressure off, it brings some control back into a stressful situation,” he said.


2. What’s over the horizon?Are the cash flow issues short term?

“I encourage our clients to look over the horizon for their business. It can be tough to do that sometimes though. Directors or business owners may feel like they are constantly putting out fires, rather than having the time or headspace to make informed, unemotive decisions. We understand that it is most difficult, even at the best of times.

From my experience, if you engage an experienced professional who has seen similar situations hundreds of times before, and who isn’t emotionally tied to the situation, options tend to become clear very quickly.

Early on, our team assesses things like:

Are the cash flow issues short term? What options are there to fill the current cash flow holes? If the cash flow issues appear longer-term, we review what the best options are right now, to start controlling the debt accumulation. We aim to stop a debt problem becoming a bigger debt problem,” Neil said.


3. Be honest early - chances are people will be more empathic

“Unfortunately, often people try to carry the burden of financial distress alone. They may not be proactive with communicating with their lender, the ATO, their landlord, their suppliers, business partners or even family members.

The last couple of years have been unpredictable to say the least! A global pandemic, labour shortages, growing supply chain challenges and a litany of natural disasters from bushfires and the recent devastating floods on the east coast of Australia, and of course international conflicts and consequential economic repercussions - it’s been an absolute nightmare for many.

Rightly so, the ATO and major lenders typically haven’t been  chasing people for repayments for some time. But we are seeing changes now, and it’s inevitable that more repayment demands will be actively enforced again.

At this time, how many businesses will be in a very difficult situation - unable to meet the demands?

I suggest business owners start a conversation with a Restructure and Recovery expert now, along with their key stakeholders that play a role in their financial situation. Communicate if they are concerned about their ability to repay. Options such as negotiating new loan or repayment terms may be on the table now, in the current economic climate.

Chances are people, including key suppliers, landlords and more broadly, institutions, will look more kindly on you if you have attempted to manage the situation earlier on, rather than letting things get worse and not admitting there was a problem,” Neil said.


4. Blaming yourself doesn’t helpAt the end of the day, we are all human and things in life do go wrong, things aren’t always within our control.

“People experiencing financial distress often tend to take it personally and blame themselves - but it’s commonly not all their fault.

At the end of the day, we are all human and things in life do go wrong, things aren’t always within our control.

We like to focus on solutions and what might be possible - right now and into the future.


Get on the front foot, don’t wait to be chased for repayments. Free, confidential phone consultations are available.

The RSM Restructuring and Recovery team is accessible to everyone, including small business owners.

For a confidential, free initial phone call with one of our team call: 1300 263 816.

If you’d rather find out more first, visit our RSM Options Hub. You'll discover lots of helpful advice and get the chance to watch Brian Evans’ personal story about financial distress.