All businesses have financial obligations to pay. But if yours is not making enough money to compensate for your debts, your business will be considered insolvent. You’d need to undergo a company liquidation — close down your company, sell your assets, and write off debts and your other obligations to your staff, e.g. Uncollected wages.

But how do you know if your company is insolvent, or on the brink of becoming one? Here are eight warning signs.

Your financial records are quite a mess. To know your financial position, you’ve got to have accurate financial records. If you’re unable to produce one quickly — or produce one at all — you’d lack the data you need to think of a strategy on how to recover from your losses.

You keep making losses. According to experts in company liquidations, one of the earliest signs you should watch out for is having recurring problems with your cash flow. If your company constantly makes a loss, you’d find it hard to have enough organic financial resources to cover your debts.

You have maximised borrowing. If your business always makes a loss, you’d be forced to borrow more. But when the time comes that you reach the limit of your company overdraft (i.e., you’re unable to borrow money), you may be forced to liquidate your company and use its proceeds to repay debts.

You’re struggling to keep up with late payments. Not only will this earn your company a bad reputation, it will also earn you more penalties — giving you more and more financial obligations to fulfill.

You’re constantly reminded by your creditors about your debt. Creditors want to get paid on time. If you’re constantly unable to pay them, it’s only natural for them to pressure you. Sometimes, this pressure gets too much to the point that the only option you’d be left with is a company liquidation.

You’re unable to pay your directors. You know your business is doing badly once you declare a director pay freeze. If you’re not able to pay the top officials of your company, they should take immediate action and lead the company into insolvency.

You have a high turnover of staff. With significant losses, it’s not only the directors that you won’t be able to pay — but your staff as well. This will lead to a high turnover of staff (read: more employees leaving your company).

The test says so. There are two types of tests that can determine if a company is insolvent or not: the cash flow test and the balance sheet test. The former measures your ability to pay debts as they fall due; the latter measures if your company has less assets than liabilities.

When it comes to company liquidations, Bridge Newland Limited is the name you can fully rely on. Offering their services at an economical rate, they are the partner you need when you need to close down your company and pay off your outstanding debts. Their process is easy to comprehend, transparent, and efficient. To learn more about their liquidation services, visit https://www.bridgenewland.co.uk/insolvent-company-liquidation-cvl. You may call them on 0800 612 6197 and get initial advice for free.