How to Talk to Your Client About Insolvency – A Guide for Advisers

Tadhg Schultz, Accountant

As Insolvency practitioners, one question we are often asked by advisers is: “How do I discuss insolvency options with a client who is in financial trouble?”. As any registered liquidator will tell you, acting early, at the first sign of financial trouble, is crucial in giving your clients the best possible chance at righting the ship, and maintaining a professional relationship with you. To help you have these types of conversations with your clients, here are our top tips that can make that difficult, but necessary conversation about insolvency more productive:

If You See Something Say Something

Early conversations addressing financial issues with your clients is just as important as the client addressing them in a timely fashion. As a trusted adviser, you have a unique and unbiased point of view on the financial health of a business. If you identify signs of distress, big or small, don’t be afraid to approach your client, even if you don’t typically act in an advisory capacity. Giving your clients the right information early on can increase the options available to them which can help their chances of recovery.

Lay Out the Facts

Speaking of giving your clients the right information, it is essentially important when talking about potential insolvency to give your client honest and indisputable evidence on why you believe there may be an issue. Running a business, amongst many other things, requires a great emotional investment for many Directors and/or individuals. Hearing that something you have put your heart and soul into may not be doing well can be hard to accept. Stick to the facts, take emotion out of it, and be understanding whilst remaining firm to your concerns. 

Change Doesn’t Happen Overnight

It is rare that a conversation about insolvency can be resolved in one or two meetings. Be prepared that your client may be hesitant to accept the reality of their situation or be slow to take the required action. To assist with this, ensure that you take steps to regularly follow up your client regarding the financial health of the business, without doing it too often, so as to not overwhelm them.

Lean on Us

Discussing potential insolvency with your client can be daunting even if you are well prepared. Clients may refuse your advice, or even lash out and hold you responsible for their situation. Try to remain strong and empathetic. If you are struggling to get the message across, we are always willing to assist in discussing insolvency options with your client.  A third-party opinion from an independent and experienced Hamilton Murphy professional can help to break through the noise. We strive to look at your client’s situation from all possible angles, and tailor solutions that give them the best possible chance of recovery and remaining your client into the future.

If you have any questions on insolvency consultations or have a client that is currently facing financial difficulty please contact the Hamilton Murphy team by telephoning (03) 8866 7600 or via email to info@hamiltonmurphy.com.au