“If a business is teetering toward financial collapse, recognizing how and when to fold isn't something that comes naturally for many smaller operators,” she writes. But identifying the warning signs early may give you time to turn things around.
Here are some of the red flags the story warns about:
- recurrent operating losses
- being unable to pay creditors on time
- being placed on cash-on-delivery status
- negative trends in financial ratios
- a buildup of accounts receivable or inventory
- poor financial records
- owing money to government for sales taxes or employee deductions
- breaches in lending covenants and borrowing limits
- being placed in the bank’s "special loans" department
- losing good employees
- excessive turnover and absenteeism.
"Any of these signs on their own may not be an issues, but if there are a number of them occurring or continuously occurring, then there should be concern," says Matthew Lem, a trustee in bankruptcy at BDO Dunwoody Ltd.
For more information, read the original story here.