How Small Businesses Can Spot the Warning Signs and Avoid Insolvency

It’s no secret that times are tough. Across New Zealand, plenty of business owners are holding their breath, waiting for things to improve. Costs are high, buying confidence is low, and cash flow isn’t as free-flowing as it used to be.

Here at My Two Cents, we see it every day. Some clients are upfront about their struggles, but many keep quiet because they worry asking for help will cost too much. The reality is, ignoring the problem can be far more expensive. When cash flow dries up, it can quickly spiral into overdue tax, mounting bills, and in the worst cases, insolvency or voluntary liquidation.

The idea of paying for professional advice when money is already tight feels scary. Yet not asking for help could be the very thing that tips the balance. Yes, it costs to get support, but that cost might be the make-or-break factor in surviving this challenging time. Whether it’s with My Two Cents or another accountant, that’s what we’re here for. To help you protect what you’ve built and find a way through.

You don’t have to figure it out by yourself. There are practical steps you can take right now to keep things under control, and we’re here to help you figure them out.

The Signs Your Business Might Be in Trouble

Most business owners have a gut feeling when things aren’t quite right, but it helps to recognise the warning signs before they snowball. You might relate to some of these:

• Cash isn’t coming in as fast as it used to.

• Customers are taking longer to pay or not paying at all.

• Jobs are being cancelled or delayed more often.

• You’re struggling to pay creditors or staff on time.

• You’re falling behind on tax payments.

• Enquiries for work have dropped off compared to this time last year.

• Every conversation with a potential customer is about price, and they vanish after the first quote.

  
  

If one or more of these sounds familiar, you’re not alone. We’re seeing dozens of businesses in exactly the same position right now. The important part is recognising it and taking action sooner rather than later.

What Happens If You Don’t Act

We know it’s uncomfortable to face the worst-case scenarios, but sometimes laying it out plainly is what makes the risks clear. If financial struggles are left unchecked, here’s what can happen:

• Mounting bills and overdue tax build up until they’re unmanageable.

• Creditors lose patience and demand payment.

• Your business becomes insolvent and you have to consider voluntary liquidation.

• Inland Revenue may enforce liquidation due to mounting tax debt

• Personal assets can come under threat, including the family home.

• Years of hard work can unravel in a matter of months.

  
  

That might sound grim, but pretending everything is fine when it isn’t is far riskier than asking for help. We’ve seen clients wait until it’s too late, and the fallout is much harder to recover from than picking up the phone early.

If you’d like to dig deeper into this, we’ve written a guide on how to reduce your risks: A Guide to Managing Shareholder Loans and Mitigating Tax Risks. It explains how shareholder loans work, the tax pitfalls to watch for, and what you can do to protect both your business and personal assets.

Why Asking for Help Matters

As a business owner, it can feel like you should have all the answers. But when you’re in the thick of financial stress, it’s impossible to see every option. That’s where we step in.

At My Two Cents, we work with hundreds of businesses, so we know the patterns, the pitfalls, and the practical fixes. Sometimes it’s as simple as putting better debtor management processes in place. Sometimes it’s renegotiating with Inland Revenue to buy time. And sometimes it’s about mapping out an action plan so you can trade out of a tough spot with confidence.

We also have trusted partners we can bring to the table, including HR specialists, liquidators, and software providers who can help streamline processes. It’s not just about what we can do in-house, it’s about making sure you’ve got the right team around you, so you’re supported from every angle.

One liquidator we worked with recently put it perfectly to one of our clients: “You need to lean on My Two Cents. If anyone’s going to help you get out of this, it’s them.”

Quick First Steps If You’re Worried

If you’re not sure whether your situation is serious but you feel uneasy, here are some simple steps you can take right now:

1. Check your cash flow. Look at your bank account and upcoming bills. Do you have enough to cover the next month comfortably?

2. Review overdue invoices. Make a list of who owes you money and how long it’s been outstanding.

3. Check your tax position. Are there GST or PAYE payments due that you haven’t put money aside for?

4. Be honest with yourself. If you’re constantly juggling which bills to pay first, that’s a red flag.Reach out early. Don’t wait until you’re in full crisis mode. Even a short chat with an advisor can make a difference.

   
   

Busting Common Myths About Business Struggles

A lot of business owners avoid asking for help because of myths that simply aren’t true. Let’s clear a few up:

• “Liquidation means the end.” Not always. In some cases, restructuring or trading out is an option. The earlier you act, the more choices you have.

• “IRD won’t negotiate.” They will. Inland Revenue would rather work with you than force insolvency, but they need clear communication and a plan.

• “It’s too embarrassing to ask for help.” Believe us, we’ve seen it all. There’s nothing shameful about asking for support. In fact, it’s one of the smartest things you can do.

  
  

Our Offer to Struggling Businesses

We know taking that first step can feel hard, so we’re offering complimentary financial review sessions to clients who qualify. If you’re experiencing signs like negative cash flow, overdue tax, or constant creditor pressure, this session is for you.

In the review, we’ll:

• Take a look at your current financial position.

• Highlight the key issues that need attention.

• Recommend practical action steps to get things back on track.

  
  

There’s no judgement, no jargon, just honest advice and a plan you can start working on straight away.

You Don’t Have to Do It Alone

Running a business is tough at the best of times, and right now it’s harder than ever. But you don’t have to figure it out by yourself.

If any of the warning signs ring true, or if you’re lying awake at night worrying about cash flow, creditors, or tax, now’s the time to act. We’re here to listen, to give you practical advice, and to help you find a way forward.

Because at the end of the day, you’ve worked too hard to lose everything now. Let’s tackle it together.

What If You’re Just a Little Worried?

Not every business is on the brink, but plenty are feeling a bit uneasy. Maybe cash flow isn’t as smooth as it once was, or you’ve noticed customers are taking longer to pay. If that’s you, there are proactive steps you can take before things get serious.

One of the most powerful tools is debtor management. Having clear terms of trade, setting up reminders, and following a consistent process for overdue invoices can make a big difference to your bank balance and your stress levels. We’ve written a full guide on how to do this here: Master Your Cash Flow: The Ultimate Guide to Getting Invoices Paid on Time.

Even small actions now can make a big difference later. Don’t wait until it’s urgent, get ahead of the worry and put some practical steps in place today.