How to Know if Your Company is Heading for Bankruptcy with 10 Warning Signs

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By Savvyone
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Article Rating: (7 Ratings)

Whether you own a business, or work for someone else, it is vital to know how long your income will last. Therefore, with more and more companies filing bankruptcy, learning the signals for trouble can help save your personal finances.

Difficulty: Moderate

Instructions

Things You'll Need:

Attention to details
Ability to ask questions of supervisor, or yourself concerning current status
Ability to face reality of financial status

Step 1

Directors can't document or explain major transactions. Therefore, use your gut feeling concerning the situation at hand.
Step 2

Management of finances become relaxed, and lack concern for format. This is an indication that things are out of control.
Step 3

Customers are given large discounts to enhance payments because of poor cash flow. For example, students will be given low cost tickets to events for promotional purposes to fill seats at baseball games. Long run costs may not be recouped.
Step 4

Contracts are accepted below standard amounts to create cash flow.
Step 5

Banks requests subordination of its loans. Perhaps, they want collateral for something very valuable.
Step 6

Key personnel leave the company without real reason. Typically, they leave with short notice, and are actively searching for new positions while working.
Step 7

Materials are scarce. Pencils and paper clips are considered high stakes issues when missing. This could translate that materials required to meet orders are lacking too.
Step 8

Payroll taxes are not paid.
Step 9

Suppliers want payments in cash.
Step 10

Customers' complaints regarding service and product quality increase.