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Dealing with Financial Distress

A Guide for the Hospitality Industry


Running a hospitality business is demanding at the best of times. Between rising food costs, rent pressures, unpredictable customer numbers, and staffing challenges, it doesn’t take much for things to fall behind. 


Cash flow can tighten quickly, and many owners find themselves personally carrying the burden. Recognising the early signs of financial distress can help you act before it becomes unmanageable.


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Signs of Financial Distress

1

Cash Balance Declining 

Your bank balance is consistently low, and daily takings are barely covering wages and supplier payments. There’s no buffer to manage slow days, cancellations, or unexpected expenses. 

2

Mounting ATO Debts

BAS, GST, or PAYG payments are overdue. You may be receiving ATO letters, payment demands, or even threats of legal action.

3

Unable to Pay Creditors on Time

You are behind on payments to key suppliers such as food and beverage wholesalers, cleaners, or equipment services. Some may be cash-on-delivery only or threatening to stop supply.

4

Superannuation Owing to Staff

Staff superannuation has not been paid on time. This puts you at risk of penalties and may damage team morale and retention.

5

Not Taking a Fair Wage for Yourself

You’re putting in long shifts - often six or seven days a week - but aren’t paying yourself properly, if at all. Your personal finances are stretched and relying on the business to survive.

6

Declining Mental Health

You’re feeling burnt out, anxious, or trapped. The constant stress is affecting your sleep, wellbeing, and ability to manage the day-to-day challenges of running the venue. 

The Importance of Early Intervention

In hospitality, margins are often thin and trading conditions can change fast. Delaying action can lead to loss of suppliers, legal risks, or insolvency. Acting early protects your options, reduces risk, and gives you space to make clear decisions — whether that’s turning things around or stepping away on your own terms.

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 a Café owner negotiate a 75% reduction in their ATO debt.


Read the Case Study >


There are Options!

When businesses face financial distress, they have several options to consider in order to manage and overcome their challenges.

Turnaround Management

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. 

Debt Restructuring


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.

Controlled Exits

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 Hospitality Businesses 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 hospitality 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.


Book a free, confidential chat with us >

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.