Member of Begbies Traynor Group Global Advisory

Trading Losses - is this the end?

16 March 2016

Trading Losses are a warning sign that your business is experiencing financial difficulty and can point to impending insolvency.

Trading Losses are effectively the "bottom line" in your Profit and Loss Statement -Income less Cost of Sales less Operating Expenses. Many factors can contribute to trading losses – a downturn in sales, perhaps a stock issue or a larger than usual expense. Many businesses will experience trading losses at some point.  

Trading losses are like a cancer eating away at the value of your business. If you hold on longer than you should, all of your equity in the business will eventually be eroded leaving you exposed to personal guarantees. Trade creditors and suppliers who deal with your business will suffer the loss of what is owed to them and you will lose your hard earnt reputation.

The longer you hold on to an unprofitable business, the greater the risk that you will lose everything. 


When do you need to do something about trading losses?

Trading Losses on their own do not necessarily mean a company is insolvent. They do however signal that attention is required to understand the reason for the loss and what can be done to turn the business around.

A review of your cost structures, how and where you source goods and services, and how you record the businesses transactions, can have a drastic effect on how you trade. Sometimes it is as easy as better recording and review systems.

You may be able to refinance or raise funds from shareholders to give your business the cash injection it needs to turn things around. You may be able to sell the business or cut your losses and close down the business before you lose everything.

Obtaining timely, professional advice can help you assess the causes for the losses, whether the problems can be resolved and if so, a strategy to continue operating and turn the business around.


Action

Don't let trading losses erode the value of your business or risk your personal assets. Take action now to protect your assets and your family. Call Rodgers Reidy for an independent, objective assessment of your business. Rodgers Reidy are experienced in advising and working with businesses in financial difficulty and have the skill and expertise to help you achieve the best possible outcome for your business.

Contact our team

Processing...
Latest News
NEW: Rodgers Reidy Singapore Office
NEW: Rodgers Reidy Singapore Office
We are pleased to introduce Rodgers Reidy Singapore. Since the firm’s inception almost 19 years ago, Rodgers Reidy has grown to be one of the foremost providers of specialist forensic, insolvenc…
Simply Lease Pty Ltd (In Liquidation) - Information for Creditors
Simply Lease Pty Ltd (In Liquidation) - Information for Creditors
Brent Morgan of Rodgers Reidy was appointed liquidator of Simply Lease Pty Ltd on 16 August 2017. The Company had ceased to trade prior to the appointment. All creditors should contact Matt Huynh or C…
NEW: Rodgers Reidy NT Office (Darwin)
NEW: Rodgers Reidy NT Office (Darwin)
Rodgers Reidy has arrived in Darwin. Since the firm’s inception almost 18 years ago Rodgers Reidy has provided specialist service to distressed businesses throughout Australia including the regional…
RSL South Australia rescued via Deed of Company Arrangement
RSL South Australia rescued via Deed of Company Arrangement
On 17 August 2017, in accordance with creditors’ approval and after a four month restructuring process, a Deed of Company Arrangement (DOCA) was executed in respect of the South Australian RSL State…
NEW: Rodgers Reidy SA Office (Adelaide)
NEW: Rodgers Reidy SA Office (Adelaide)
Since the firm’s inception almost 18 years ago, Rodgers Reidy has provided specialist services to distressed businesses throughout Australia including the regional and rural sectors of the economy. …
Shareholder Distribution in a Court Liquidation
Shareholder Distribution in a Court Liquidation
Our Melbourne office has recently dealt with a unique matter on the Court Liquidation of Dentucorp Pty Ltd (In Liquidation). Background The only substantial asset of the Company was a property in Geel…
Menu