Questions & Answers

Safe Harbour is a provision under section 588GA of the Corporations Act 2001 (Cth). Broadly, it can provide a Safe Harbour from civil liability for insolvent trading in certain circumstances where an eligible director develops and takes a course of action reasonably likely to lead to a better outcome for the company than immediate administration or liquidation. It is not automatic, and its application depends on the legislation and the particular circumstances. Our role is to help turn the financial and operational work behind that course of action into something practical, measurable and properly documented.

No. Safe Harbour is not automatic and our involvement cannot guarantee that it applies. Its application depends on the requirements of the legislation and the particular facts and circumstances of the company and director. Our job is different. We help establish reliable financial information, develop and implement actions, measure what happens and maintain a contemporaneous record of the work being undertaken. Where legal interpretation is required, appropriate legal advice should be obtained.

Safe Harbour becomes relevant in the context contemplated by section 588GA, including where a director has started to suspect that the company may become or be insolvent. That does not necessarily mean the doors are about to close. Financial pressure can appear much earlier through tightening cash, growing tax debt, stretched creditors, overdue obligations or increasing reliance on finance. Those are warning signs to investigate — not, by themselves, a determination that the company is insolvent or that Safe Harbour applies.

Start with the warning signs. Is cash becoming increasingly difficult to manage? Is ATO debt accumulating? Are suppliers being paid outside terms? Are payment arrangements becoming normal? Is the business busy but still unable to build cash? None of these individually determines insolvency. But if you are increasingly asking yourself "Why is this business working so hard and still going backwards?", it is time to establish the financial truth and obtain appropriate advice.

Early. Not because every period of financial pressure means a company is insolvent, but because delay can reduce the options available. The first response should be to establish the facts. Get the accounts current. Understand cash. Know what is owed to and by the business. Establish the ATO and employee entitlement position. Understand the Balance Sheet. Then informed decisions can be made about what needs to happen next.

Financial problems rarely improve simply because they are ignored. Cash pressure can increase. Tax debt can accumulate. Creditors can become less patient. Expensive finance can fill the gap. And decisions can become increasingly constrained. Doing nothing doesn’t necessarily mean immediate failure. But it does mean the underlying problem remains unidentified or unresolved.

We cannot answer that without understanding the business. Some businesses have viable options. Others may require formal restructuring or insolvency advice. Our first job is not to assume either outcome. Our first job is to establish the truth.

The accounts. But we don’t simply print a profit and loss statement and assume it is correct. We want current, reconciled financial records. We examine the Balance Sheet, bank accounts, debtors, creditors, loans and finance schedules, taxation liabilities, employee entitlements, assets, depreciation, director loan accounts and funding introduced by directors. Then we ask: can we trust these numbers enough to make decisions from them?

Because it tells a different story from the profit and loss statement. It helps us understand what the business owns, what it owes, who has funded it, what is tied up in debtors and assets, what liabilities have accumulated and whether the financial position is strengthening or weakening. A reported profit alone does not tell us whether the business is financially healthy.

Possibly. What matters is whether we can obtain the accurate, current financial information required for the work. If your existing accounting arrangements can provide that information quickly and reliably, we can discuss how everyone works together. If the accounts require significant correction or cannot provide the information needed, we will explain what needs to change.

We need sufficient access to understand the financial position properly. That will commonly include accounting records, relevant banking information, ATO accounts, debtors, creditors, payroll and superannuation information, finance commitments and other information relevant to the company. We don’t want to work from assumptions. We want the truth.

Yes. Through Fresh Numbers, our accounting firm, we can integrate accounting and compliance work with the wider program where appropriate. That can be particularly valuable because the same reliable financial information used for compliance can then become part of the continuing management and measurement of the business.

We regularly work with clients in relation to their ATO position. Before deciding what approach should be taken, however, we want to understand the company’s actual financial position and its capacity to meet current and future obligations. An ATO arrangement does not fix an underlying cash problem. We want to understand why the debt developed and what needs to change so that history does not simply repeat itself.

Yes. We start by establishing exactly who is owed, how much is owed and how old the debt is. Then we can help the director understand the creditor position and consider practical strategies for dealing with it. The objective isn’t simply to push creditors further into the future. It is to understand the cash problem that created the pressure in the first place.

Absolutely. Cash is central to our work. But our first answer to a cash shortage is not automatically another loan. We want to understand why cash is disappearing. That may lead us to debtors, pricing, margins, costs, purchasing, tax, finance, drawings, productivity or other parts of the business. Find the cause before funding the symptom.

Possibly. Directors can face personal exposure in a number of circumstances, including matters involving insolvent trading, director guarantees and certain taxation liabilities. The position depends on the particular circumstances. We help establish the financial facts and identify issues requiring attention. Where legal advice about personal liability or exposure is required, we work with or recommend appropriate legal advisers.

There is no responsible general answer to that question. The outcome depends on the company, its debts, guarantees, assets, taxation position, personal circumstances and many other factors. What matters is understanding the position early rather than making decisions based on fear or assumptions.

We can help identify the financial issues and understand how the business and personal position interact. We do not provide legal asset-protection advice or implement legal structures. Where questions arise about personal guarantees, ownership structures, the family home or other legal rights and exposures, appropriate independent legal advice should be obtained.

Broadly, Australia’s insolvent trading provisions can create civil liability for directors in circumstances where a company incurs debts while insolvent and the statutory requirements are met. It is an important and potentially complex area of law. We do not determine whether a director has engaged in insolvent trading. We help establish the financial position and provide the information needed for informed decisions and, where necessary, legal advice.

We start with the truth. We get the financial information into a position where it can be relied upon. Then we identify what needs to change, help develop the course of action and remain involved while actions are implemented and results measured. Our process is: Truth → Decision → Action → Measurement → Correction → New Truth. Then we do it again.

No. That distinction is important. A report can tell you what somebody thought about the business on a particular day. We want to know what happened next. We regularly review the financial information, agreed actions and results. If something isn’t working, we want to know why and determine what needs to change. Not set and forget.

That depends on the circumstances of the business. Our work can involve weekly, monthly and quarterly review, with more frequent involvement where required. Different information tells us different things at different times. The important point is that we remain close enough to the business to measure what is happening rather than discovering months later that something went wrong.

Probably. If nothing changes, it is difficult to expect a different financial result. But we’re not interested in change for the sake of change. We use the financial information to identify what needs attention, agree on practical actions and then measure whether those actions work. Over time, repeated actions can become better business habits.

No. The numbers often lead us outside the numbers. They may identify a problem involving pricing, quoting, customers, productivity, staffing, purchasing, operations or the way work is being won and managed. When they do, we have those conversations. We follow the financial information to wherever the underlying problem sits.

The cost depends on the size, complexity and condition of the business. Our ongoing Safe Harbour program can start from approximately $350 plus GST per week, with higher fees for more complex businesses. There may also be an initial setup cost and, importantly, additional work may be required if the accounting records need to be brought fully up to date and reconciled before reliable decisions can be made. We explain those costs before the work proceeds.

Because we have spent years building the delivery model. More than 31 years of experience tells us where to look. Our accounting capability gives us access to reliable financial information. Structured systems reduce duplication. AI-supported analysis allows us to process and compare information much more efficiently. And our team structure means senior experience can be concentrated where judgement matters most. Not cheaper because we do less. More accessible because we have learned how to do more efficiently.

It is a cost, and we don’t pretend otherwise. That cost needs to be considered in the context of the company’s financial position and available options. We designed the program specifically to make continuing financial analysis and experienced support more accessible to Australian SMEs, but it still needs to make commercial sense for the individual business.

They are different roles. Registered liquidators and insolvency practitioners perform important specialist functions, particularly in formal insolvency and restructuring processes. Our work is focused on the financial information, management actions, measurement and continuing business changes involved while the company is operating. Where insolvency expertise or formal restructuring advice is required, insolvency practitioners may form an important part of the professional team.

Your Business Angels has worked with Australian businesses since 1995. For more than 31 years, we have worked with owners through growth, financial pressure, restructuring and serious financial difficulty. We have also spent decades working alongside accountants, lawyers, insolvency practitioners and creditors. That experience has shaped the process we use today. The numbers tell us where to look. Experience helps us know what questions to ask.

You will have experienced people involved in your engagement, supported by our wider Your Business Angels and Fresh Numbers team. Our systems allow much of the financial preparation and analysis to happen efficiently, while experienced people remain involved in interpreting what the information means, challenging the results and working with you on what happens next.

It shouldn’t be. We are not interested in keeping a business trading simply for the sake of keeping it trading. Some businesses can improve. Some may need a different restructuring option. Some may ultimately need formal insolvency processes. Our job is to establish the position honestly and help the director and their advisers make informed decisions from there.

Establish the truth. We begin by understanding the company, its financial records and the pressures it is experiencing. If there are concerns about actual or potential insolvency, appropriate professional and legal advice may also be required. From there, we can determine what work needs to happen next.

Yes. You don’t need to diagnose the problem before speaking to us. Tell us what is happening. Tell us what is worrying you. Show us the numbers. And we will start by helping you understand what questions need to be answered.