The twelve signs, and where to read each
| Sign | Where it shows | Our page |
|---|---|---|
| Gross margin sliding | Monthly P&L | Margins shrinking |
| Debtor days rising | Receivables ageing | Receivables stretching |
| Stock days rising | Stock ageing | Stock piling up |
| Bank limit always full | Bank statements | The bank is asking questions |
| Overheads outgrowing sales | Overhead lines | Overheads rising |
| Creditors stretching | Payables ageing | Paying suppliers late |
| One customer too big | Sales by customer | One customer too big |
| Interest taking the profit | Interest cover | Interest eating profit |
| Sales up, cash down | Cash conversion cycle | Sales up, cash down |
| Discounting to hit targets | Price realisation | Discounting |
| Owner drawings above profit | Drawings and advances | Promoter withdrawals |
| Losses for two years | Annual P&L | Losses for two years |
How many do you have?
One sign is a note to self. Three is a pattern. As a rule of thumb, five or more means the numbers are shouting. Use the readiness score for a quick check.
The softer signs
- Monthly accounts arrive late or not at all.
- You avoid looking at the numbers.
- Key people leave without a clear reason.
- Customers or suppliers start asking for advance payment.
- You are using personal money to bridge business gaps.
CFOAvatar complements every turnaround
A human CFO sees your business at the review. Problems do not wait for the meeting. CFOAvatar is connected to your accounting data and checks your numbers every day, so the scoreboard in a turnaround is always current. Ask it what an owner in trouble would ask:
What owners say after the numbers started talking
They have facilitated us in putting both process and financial systems in place as well as take some very difficult but required decisions. We are indeed pleased to record our appreciation of their individualized, friendly and timely support in our activities during the course of their association.
We now prepare monthly business plans that clearly show revenue, costs, and final profit. This has helped us plan better and avoid last-minute surprises.
Before CFOSurge came into the picture, our business lacked financial discipline. Once their team started overseeing our finances, everything fell into place. There was accountability and when you know someone is keeping track, you ensure things get done properly. It’s been three years and the systems they put in place are still working well. Our business is in a much better position today.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
What are the early warning signs of business failure?
Falling margins, rising debtor and stock days, a full bank limit, overheads outgrowing sales, stretching creditors, concentration in one customer, heavy interest and cash that never matches profit.
How early can these signs be seen?
Often months or years ahead, in monthly numbers. The challenge is looking at the trend, not the total.
What should I do if I see several?
Run the readiness score, build a 13-week cash forecast and speak to a CFO. Early action is cheaper in every way.