As we approach the end of 2025, many business owners are focused on wrapping up the year, final invoices, pre-holiday trading, and much-needed time off.
But for accountants, bookkeepers, and financial advisors, this is one of the most important advisory windows of the year. December and January often reveal the first signs of financial stress, and the advisors who spot them early can help clients protect value, preserve reputation, and avoid crisis.
Here’s what to look for and what to talk about with your clients before the year ends.
December Cashflow Warning Signs: What Small Business Owners Must Know Heading into the New Year
December can distort business performance. Some clients experience a temporary cash inflow, while others face a sudden slowdown, yet overheads continue regardless. As an advisor, you can help clients identify warning signs early, such as:
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Customers requesting to delay payment “until after the holidays.”
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Cashflow forecasts that stop at 31 December.
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Heavy reliance on credit cards, overdrafts, or personal funds to meet obligations.
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Mounting ATO or creditor pressure letters.
Encourage your clients to extend their cashflow forecast through to March 2026. If liquidity tightens or the January lull looks unmanageable, early engagement is critical.
Year-in-Review: What the 2025 Insolvency Data Reveals for QLD, NSW, and VIC
The data from 2025 tells a clear story. Insolvencies are rising sharply nationwide, with some states seeing record increases.
Nationally, ASIC recorded 13,413 companies entering external administration in the 12 months to 31 May 2025, a 34% increase from 2023-24. The rate of company failures rose to 0.41% of all registered companies, up from 0.32%.
- Victoria recorded one of the steepest climbs with a 77% increase in appointments in the first half of FY25 compared with H1 FY24.
- Queensland saw a 59% rise, while NSW recorded a 36% lift.
- Across Australia, more than 10,000 companies entered insolvency in the first six months of FY25 alone, a 53% national increase year-on-year.
For clients, these figures highlight a structural shift. Credit conditions have tightened, the ATO has ramped up recovery action, and post-COVID deferrals have fully unwound. Directors need to assess whether their debt position and trading model remain sustainable in this environment, and advisors are best placed to lead that conversation.
Holiday Trading, Quiet January and Insolvency Risk: How to Prepare Now
For many businesses, the holiday period creates a “cashflow illusion.” December may bring strong turnover, but by late January, that surplus is gone, often replaced by unpaid invoices, looming BAS liabilities, and payroll obligations. To prepare clients:
- Build a cashflow forecast covering December to March.
- Include tax, superannuation, and creditor payments due after the break.
- Encourage communication with key creditors early, especially landlords and suppliers.
- Advise against using personal funds to bridge business shortfalls without a formal plan.
A realistic forecast now is far cheaper than an emergency fix in February. Accountants and bookkeepers often see the cash position shift first hence using that early visibility to refer your clients for advice or restructuring options can be the difference between recovery and crisis.
Top 5 Mistakes We See Directors Make Between December and January (And How to Avoid Them)
- Waiting until after the holidays to face financial issues. By then, fewer options remain.
- Assuming holiday revenue will offset debt. It rarely does.
- Ignoring ATO or creditor notices over the break.
- Topping up with personal loans, risking family assets.
- Failing to engage advisors early, missing the window for restructuring or negotiation.
You should use December meetings to review trading performance and discuss contingencies with your clients early as early, informed action protects both business value and personal liability exposure.
Sector Spotlight: Retail and Hospitality Post-Boxing Day — What We’re Seeing
Retail and hospitality often look healthy through December with full venues and strong sales, but the pressure builds quickly once the holiday rush ends.
In January 2025, these sectors recorded some of the highest rates of insolvency appointments in Australia, driven by rising wage and rent costs, slower consumer spending after Christmas, over-ordering of seasonal stock, and deferred supplier payments coming due simultaneously.
As advisors, we should be encouraging clients in these industries to prepare post-Boxing Day stock and staffing plans, track cash daily through January, and avoid locking into large promotional or expansion costs until demand stabilises.
A good December doesn’t guarantee a safe January.
From Business Restructure to Recovery: Timely Steps if Your Client Is Already Struggling
If your client is under strain, time is the most valuable asset. Early intervention provides far more choices than crisis management.
Work with them to review solvency indicators and director duties, prioritise essential expenses and cash preservation, explore Small Business Restructuring (SBR) or other formal or informal arrangements before formal insolvency, and document all communications with creditors to maintain transparency and goodwill.
A well-planned restructure can convert an unviable position into a controlled recovery. Many businesses that act now can retain control and emerge stronger by mid-2026.
What You Should Tell Your Clients for Year-End: Insolvency Red Flags and Early Action
Use year-end conversations to bring financial health to the forefront. Some practical questions include:
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Can your cashflow handle 6–8 weeks of reduced income?
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Are all BAS, super, and PAYG obligations current?
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Have any suppliers shortened payment terms or stopped credit?
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If revenue drops by 20% in January, what’s your backup plan?
These discussions build trust and can prompt your clients to seek help while the options remain broad.
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December and January aren’t quiet months; they’re decision months.
Encourage your clients to review cashflow, assess structure, and act before problems compound. The latest insolvency data shows a clear trend: pressures are rising across all states, but early, informed advice can still turn the outcome around.
The best gift you can give your clients this season is clarity. Help them see the warning signs early and step into 2026 with control and confidence.
If you have clients showing early signs of financial strain, take action now. Contact the de Jonge Read® team today to discuss the best course of action and protect your client’s financial future.
Should you have clients or associates that you know are struggling with financial issues or need assistance in reviewing their business affairs in preparation for what’s around the corner, our team of Strategists would be pleased to discuss options that are available on how to best design and implement insolvency strategies. Contact us now on p. 1300 765 080 | ua.mo1764804038c.arj1764804038d@ofn1764804038i1764804038
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
