When should directors start considering insolvency advice?

Directors should seek insolvency advice as soon as they identify warning signs that the business is struggling financially. Common red flags include persistent cashflow shortfalls, creditor demands or threats of legal action, an inability to pay HMRC on time, and increasing reliance on short-term borrowing facilities. Waiting until the situation reaches crisis point often reduces the number of rescue options available. For example, when liabilities mount and suppliers withdraw support, it may be too late to arrange a Company Voluntary Arrangement (CVA) or to refinance effectively. By contrast, directors who act early can often explore informal repayment deals, restructuring, or time-to-pay arrangements with HMRC that preserve the business and avoid formal insolvency. The law requires directors of distressed companies to act in the best interests of creditors, not themselves or shareholders, once insolvency is a serious risk. Seeking timely advice also helps directors avoid personal liability for wrongful trading. In short, the earlier advice is taken, the more solutions remain on the table, and the greater the chance of rescuing the company.