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I Can’t Pay My Debts. What should I do?


Bruce Gleeson
Bruce Gleeson

Individuals and Directors or Owners of a Small to Medium Enterprise (SME) that are struggling with unmanageable debts should get professional help to manage a financial crisis. And No, google alone will not cut it because it is far too important. Any individual or SME ultimately needs cashflow to survive and this process becomes even more problematic to manage in times of a financial crisis.

Unfortunately, many individuals and SME's have been impacted in certain areas of Australia from the recent bushfires and there are also confidence issues more broadly from the Coronavirus (Covid-19) that is likely to affect economic activity. During these times and particularly with some of the alarmist media coverage of Covid-19, it can sometimes feel like the walls are closing in. Whether it is perception or perhaps a more real position, in either scenario, the emotional stress and anxiety are very real. What would I do if my cashflow was declining and/or I had significant tax debts, credit card debts or owed large amounts to suppliers? I would ask myself the three (3) questions below:

Start by asking yourself? Do you have the skillset to critically review the current financial position that you are in?

Secondly, ask yourself, do I/we have the right skills (either individually or within the SME itself) to implement the required changes?

Thirdly, how much is the thought of the cost of obtaining professional advice holding you back from reaching out? In other words, what price are you prepared to pay on not getting professional help? For example, losing the ability to continue in business going forward or losing family home?

Where I can help?

  • As an insolvency, restructuring and turnaround professional, I am regularly looking at individuals and SMEs in differing levels of financial crisis and showing them that there is light at the end of the tunnel.
  • I am in the position where I can listen, consider and develop a strategy without emotions taking over. This is important because we can all think of an example where we have let our emotions take control and upon reflection view that the optimal course of action was not taken.
  • My role is not to judge individuals, Directors or Owners based on the financial crisis they are experiencing - indeed often a major contributing factor is an exogenous event.
    My role is to develop a sensible and planned strategy (and monitor same) for the individual or Director/Owner to deal with the financial crisis. Part of this review also involves asking the simple question: what aspect is causing you the most stress?
  • The goal is to develop a strategy that effectively deals with the financial crisis so that there is a clear understanding where to from here. This is not about just providing information. It is a strategy that gives a sense of direction and purpose moving forward and ensuring there is "buy in by the individual and Director or Owner".
  • When it comes to costs - my practice has always offered an introductory free meeting which is structured to optimise the use of that time so we can really get to discussing the financial crisis and how to deal with it. This has been and remains the cornerstone of my advisory practice - it is not been something that has been recently created to cater for the above exogenous events.

Yes - moving beyond the introductory meeting, I provide an engagement letter and suggestion as to what the level of professional costs may be. However, cost should not generally be the first and only concern by those in financial distress. Getting on board with a professional you have confidence in is paramount.

Be aware of unregulated or unlicensed advisors that promise the world, yet often do not deliver what you have been promised and this simply heightens the ongoing stress and anxiety. I recently was contacted by an individual who had paid an unregulated advisor $16,500 to provide services that never really provided the advice envisaged.

Whilst we may be entering a slightly challenging economic period throughout the balance of the calendar year, I believe we will all get through it if we remain calm, pragmatic and get the right advice along the way.

This article but for the update provided below has been quite non-technical. Rest assured that has been quite deliberate because there is very much a human dimension to any financial crisis, and they need to know that professional and independent help is only a phone call or email away.

Update on GST and personal liability of directors

In issue 100, 2020 I wrote about a Bill that was awaiting to be passed by the Federal Government whereby one of the changes was to extend the Director Penalty Notice ("DPN") regime to include GST. I note that this Bill has
been passed and received Royal Assent on 17/02/2020.

From 1 April 2020 the ATO will be able to collect estimate of anticipated GST liabilities and make directors personally liable for company GST liabilities in certain circumstances; which are broadly similar to the current DPN regime that exists for PAYG and superannuation. Now more than ever it is critical to lodge BASs on time. If you would like to discuss how this may impact you or your clients, please drop me a line.


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