Dealing with Financial Distress
A Guide for the Trades and Construction Industry
The trades sector is the backbone of the economy, but it’s also highly exposed to cash flow challenges, rising costs, labour shortages, and delayed payments.
Whether you're a sole trader, subcontractor, or running a company with staff, the reality is that financial distress can creep up fast. Spotting the signs early and taking action can mean the difference between survival and collapse.
Signs of Financial Distress
Cash Balance Declining
Your business bank account is always running low or in overdraft, with little to no buffer to manage unexpected costs.
Mounting ATO Debts
You’re falling behind on BAS, GST, or tax payments and may be receiving payment demands or warnings from the ATO.
Unable to Pay Creditors on Time
Suppliers, subcontractors, and other creditors aren’t being paid when due, putting pressure on your relationships and supply chain.
Superannuation Owing to Staff
You’re behind on superannuation payments for your employees, which creates legal risks and impacts staff trust.
Not Taking a Fair Wage for Yourself
You are working long hours without paying yourself a proper wage. This is unsustainable and puts pressure on your personal finances and wellbeing.
Declining Mental Health
You are feeling constantly stressed, overwhelmed, or burnt out. This is affecting your health, relationships, and ability to make clear decisions.
The Importance of Early Intervention
Financial distress rarely improves on its own. Waiting too long can reduce the options available and increase the risk of insolvency, personal liability, and loss of reputation.
More options to resolve
Early detection provides time to explore options such as renegotiating debt terms and implementing cash flow turnround strategies.
Avoid insolvency
Early action helps preserve cash flow, ensuring the business can meet its short-term obligations like payroll, supplier payments, and loan repayments.
Protect business relationships
Early communication with suppliers and customers can help maintain trust and continued support and preventing disruptions.
Avoid penalties and interest
Addressing distress early ensures the business remains compliant with regulatory requirements, avoiding penalties, fines, or legal repercussions.
Financial Recovery in Action
Find out how we used the Small Business Restructuring provisions to help an Electrician negotiate a 75% reduction in their ATO debt.
There are Options!
When businesses face financial distress, they have several options to consider in order to manage and overcome their challenges.
Cash turnarounds are part of a broader business recovery process. It involves looking at the core reasons for the financial distress and implementing simple initiatives to improve the situation.
If addressing the financial distress early enough, implementing a cash turnaround strategy may put the business back on a positive path, and avoid more formal appointments such as an SBR.
Restructuring can take many forms, from structured mechanisms such as Small Business Restructures, to informal debt negotiations.
Some restructuring types can be very complex and costly to undertake, so there needs to be a clear understanding of how and why the restructure is happening.
In some cases it can be too late to restructure or implement a cash turnaround strategy. This may be because creditors have issued formal notices to begin winding down proceedings, or it could simply be because the the business owner's appetite to keep the business going has diminished.
In these cases, it's really important to control an exit from the business that protects the directors as much as possible in the circumstances.
Issues for Tradies to Consider when Selecting a Way Forward
Licence Protection
Some avenues may have adverse affects on operational licences, both for the business and the directors.
Relationships with key suppliers
Any plan to manage the financial distress should include proactive engagement and communication with critical suppliers.
Cash flow financing
Often when a business is in financial distress access to credit becomes restricted, making it more difficult to manage out of the problem.
Personal exposure
Directors may hold personally liability for the debts of the business. These should be identified and managed throughout the process. Read more about Directors Penalty Notices (DPNs)
Free Interactive Guide
Your Options when in Financial Distress
Want a more detailed explanation of what options available for trades businesses? This guide will take you through the options available.
At Thryvv.io, we're Business Turnaround Specialists that work for you.
How We Help – Director’s Advocacy in Action
As Director’s Advocates, we work for you, the business owner, not the banks, creditors, or government. Our job is to help you navigate financial distress with clarity and confidence.
We understand the weight financial distress carries and how hard it is to ask for help. But the sooner you reach out, the more options you have - and the better the outcome for you, your business, and your family.
01 Control the Process
Establish a recovery board to identify the problems, control the process and oversee progress.
03 Understand the Numbers
Introducing financial discipline, including rolling cash flow forecasts, margin reviews and cost controls
05 Proactively Engage
Rebuilding confidence with stakeholders, including staff, customers, creditors, and investors.
02 Bring in the Right People
Use our extensive professional networks to bringing in specialist support when and where needed.
04 Manage Director Risks
Ensuring director risks and governance obligations are actively managed, using tools like DirectorShield.
06 Advocate for the Director
We act as the intermediary between the Director and the practitioner, advocating for their interests throughout.
Book a Strategy Call with us
Book a free strategy call with us today and take the first step toward getting back in control. We’ll help you understand your position, weigh your options, and build a clear path forward — without judgement, pressure, or jargon.