For many business owners, managing debt is one of the most stressful parts of running a company. From cash flow challenges to unpaid tax liabilities, debt can mount quickly and create overwhelming pressure. At de Jonge Read, we specialise in helping businesses across Australia regain control of their financial situation through practical debt relief and recovery solutions.
This page outlines how to recognise when debt is becoming unmanageable, what options are available to you, and how to move toward a healthier financial future.
When Business Debt Becomes a Problem
Not all debt is bad – many businesses rely on borrowing to fund growth. However, if repayments begin to outweigh income, or if you’re relying on new credit to pay off old debts, it may be time to act.
Common red flags include:
- Regularly missing loan repayments
- Late or unpaid tax obligations
- Avoiding phone calls from creditors
- Making only minimum payments on business credit cards
- Cash flow issues that prevent reinvestment in the business
At de Jonge Read, we help you assess the full picture and create a strategy to address it head-on.
How to Write Off a Bad Debt
In some cases, writing off a debt may be the most practical solution. A bad debt is money owed to your business that is unlikely to be recovered, even after collection attempts.
Writing off bad debts can:
- Clean up your balance sheet
- Provide a tax deduction if properly documented
- Help shift your focus to active clients and receivables
We can help assess whether a debt qualifies for write-off and ensure it’s properly accounted for.
Debt Recovery Plans
When business debt is still recoverable, a structured recovery plan can provide clarity and direction.
These plans typically include:
- A breakdown of debts and prioritisation of repayments
- Negotiation strategies for payment terms or settlements
- Cash flow projections and expense adjustments
We provide templates and tailored advice to help you draft a workable recovery strategy that protects your cash flow and stakeholder relationships.
Closing a Business with Debt
If your business is no longer viable, you may be considering closing down, but what happens to the outstanding debts?
In many cases, directors may close a company via liquidation, which legally deals with remaining debts. It’s essential not to abandon the business or leave creditors unpaid without following proper procedures.
de Jonge Read can guide you through the legal steps required to close a company responsibly while limiting personal liability.
What If You Can’t Pay Your Business Taxes?
Tax debt is one of the most common pressures faced by small businesses. Ignoring it can lead to interest penalties, garnishee notices, or director penalties.
We help clients:
- Negotiate payment plans with the ATO
- Understand director obligations
- Avoid escalated enforcement action
The earlier you act, the more options you’ll have available.
What If You’re Declared Insolvent?
If your business cannot meet its financial obligations, it may be deemed insolvent. Continuing to trade in this state without seeking advice could expose you to serious legal risk.
At de Jonge Read, we assess your position and discuss the most appropriate path forward, whether that’s restructuring, voluntary administration, or winding up.
de Jonge Read’s Approach to Business Debt
We don’t believe in one-size-fits-all advice. Every business is different, and every recovery plan should reflect that.
Our team offers:
- Confidential financial reviews
- Practical, non-judgemental advice
- Strategies for both immediate and long-term relief
Whether you’re looking to restructure, settle debts, or exit the business, de Jonge Read is here to help you regain control.
Start Your Recovery Today
Debt doesn’t need to define your business. With the right guidance and a clear plan, you can take meaningful steps toward recovery and stability.
de Jonge Read supports business owners every step of the way.
Feeling overwhelmed by debt? Speak to our team for a confidential consultation.
Frequently Asked Questions
What is bad business debt?
Bad business debt refers to amounts owed to your business that are unlikely to be recovered. Writing off bad debt can provide tax benefits and improve financial clarity.
What is the best way to write off a bad debt?
Document attempts to recover the debt and demonstrate it is uncollectible. Then write it off in your accounting records. de Jonge Read can assist with the process.
What do you do when your business is in debt?
Start by assessing your full financial picture. Create a repayment plan, reduce non-essential expenses, and seek professional advice early.
Can you close a company with debt?
Yes, but it must be done through formal processes like liquidation to address outstanding debts legally. Don’t abandon the business without advice.
Are there small business debt relief programs?
Various government and lender support programs may help small businesses manage debt. de Jonge Read can help identify what you may be eligible for.
What happens if a business doesn’t pay taxes?
The ATO can apply interest, issue garnishee notices, or hold directors personally liable. Early engagement and payment plans can prevent escalation.
What if a company cannot pay its debts?
It may be deemed insolvent. Directors must act immediately to avoid trading while insolvent. de Jonge Read can assess the situation and recommend next steps.
What happens when a company is declared insolvent?
The company may enter administration or liquidation. Assets are sold to pay creditors, and the business may be deregistered.
Is it illegal to run an insolvent company?
Yes. Directors can face penalties if they knowingly allow a company to trade while insolvent. Legal advice is essential.