The pages above explain why solvency matters and where the gaps in governance lie. The User Manual is the practical guide to using BoardSolvency itself.
You are legally responsible for solvency — not the profitability of this business.
Most boards manage for profit instead. Directors carry personal responsibility for keeping a company solvent, yet almost every board pack is built around the profit and loss statement, with cash treated as an afterthought further down the page.
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Why this happens: accounting software and standard management reports are built to show performance — revenue, margin, profit — because that's what's easy to measure and easy to present. Cash flow is harder to model properly, so it's often reduced to a single "cash at bank" figure with no forward view.
Who this affects: under the Corporations Act, directors — not just the accountant or CFO — are personally liable if a company trades while insolvent. Signing off on a profitable-looking report doesn't discharge that responsibility if the business genuinely can't pay its debts as they fall due.
What "solvent" actually means: it isn't an accounting opinion. It's a specific, factual question — can the business pay everything it owes, when it falls due, from cash it actually has or can access. A profitable business can still fail this test if too much of that profit is tied up in stock, unpaid invoices, or growth.
You must understand the six areas to protect your personal liability.
Personal responsibility begins day one
The moment you accept a directorship, you are personally responsible for keeping that company solvent — paying every bill, every obligation, every time.
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This duty attaches to you personally, not to the company. It applies equally whether you're an executive director running the business day to day or a non-executive director attending quarterly meetings.
The courts assess what you knew, what you should have known, and what you did about it. Directors found to have allowed a company to trade while insolvent can be made personally liable for the debts incurred — regardless of how blameless their own conduct otherwise was.
Insolvency risk is at a decade high
Every year thousands of Australian companies are forced to close. The current economic environment makes insolvency risk higher than it has been for a decade.
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Rising costs, tighter margins and higher financing costs are compressing the cash buffer many businesses used to rely on. A company that looked comfortably profitable eighteen months ago can be cash-constrained today, often before management reporting catches up with the change.
See "The problem," further down the page, for why this shift is catching so many boards by surprise.
The law gives you no excuse for not knowing
ASIC RG 217 and Section 588G impose direct personal liability on every director who allows a company to trade while insolvent. The courts do not accept "I relied on management's reports" as a defence.
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Section 588G of the Corporations Act creates the underlying insolvent trading duty. ASIC's Regulatory Guide 217 sets out how directors are expected to monitor and respond to solvency risk in practice.
Together, they mean a director can't discharge this duty simply by receiving a report — they need to be able to show they actively understood and questioned what it said.
Know your true cash requirement
To prevent a cashflow crisis you need to know how much cashflow the business requires — a number almost never reported to the board.
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Most board packs report revenue, margin and profit, because that's what standard accounting software is built to show. The number that actually matters for solvency — the cash a business needs every month to meet every obligation, including drawings, tax and debt repayments — is rarely calculated, let alone reported.
See "The process to a solution," further down the page, for how the Sustainable Cashflow Formula calculates this figure directly.
Forecast forward, not just look back
You need to analyse past results and forecast future cashflow requirements — managing the fundamental picture of all cash IN equal to or greater than all cash OUT. This is a safe harbour requirement.
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The Safe Harbour provisions only protect directors who can show they took active, informed steps in response to solvency risk — not those who simply hoped for the best.
A rolling forward forecast, reviewed regularly, is one of the clearest ways to demonstrate that active oversight.
BoardSolvency exists to close this gap
BoardSolvency is the tool that gives every director the knowledge, the ratios and the living forecast to govern with confidence — before the crisis, not after.
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The sections below walk through exactly how: the Sustainable Cashflow Formula, the living three-year forecast, and the plain-English quarterly board report.
Read on, or jump straight to "The product" further down the page.
Tough trading conditions are pushing more businesses toward insolvency — and most boards don't have a way to see it coming.
Rising costs, tighter competition, and a harder economic climate are testing SME cash positions harder than in years. Most boards agree to and sign management reports without an independent way to verify the company's true cash position.
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Why now: input costs, wages, and financing costs have all moved in the wrong direction for many SMEs at once, compressing the cash margin businesses used to be able to rely on as a buffer.
How boards get caught out: a business can look healthy on quarterly figures right up until a specific month it can't cover a wage run, a supplier payment, or a loan repayment — because nothing in the standard reporting pack was built to show that moment coming.
Where the gap sits: most directors aren't finance professionals, and aren't expected to be. But without a simple, independent check, the board's only real option is to trust that management's report is telling the full story.
Regulators are tightening enforcement of director duties — and there's been no simple product built to help directors meet them.
ASIC's guidance on director duties and the Safe Harbour provisions has sharpened director accountability for insolvent trading, with real personal penalties. But between complex accounting platforms and no tool at all, directors have had nowhere accessible to turn.
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Which rules matter here: Section 588G of the Corporations Act creates personal liability for directors who allow a company to trade while insolvent. The Safe Harbour provisions offer protection — but only to directors who can show they took active, informed steps to address the risk, not those who simply hoped for the best.
Why existing software doesn't solve this: accounting platforms report what already happened. They aren't built to answer the forward-looking question a director actually needs answered: at current trading levels, is this business heading toward or away from solvency?
Who this leaves exposed: smaller and mid-size businesses in particular, where the board often doesn't have a dedicated CFO and relies entirely on whatever the accounting system happens to show them.
One plain question, asked properly: does cash coming in cover cash going out?
BoardSolvency is built around the Sustainable Cashflow Formula — all cash in must equal or exceed all cash out. It gives directors a clear breakeven revenue figure, a live solvency check, and a simple quarterly reporting rhythm the whole board can follow.
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How it's different from standard ratios: conventional metrics like DSCR measure whether a business can service its debt repayments. The Sustainable Cashflow Formula goes further — it accounts for every cash movement, including drawings, tax obligations, and reserves, to find the true breakeven revenue a business needs to stay solvent.
What directors actually see: a live dashboard showing the business's current position against its breakeven revenue, across the current year and the two years ahead, so a downward trend is visible well before it becomes a crisis.
Why quarterly: frequent enough to catch a genuine problem early, infrequent enough that it doesn't become a compliance burden on top of everything else a board already does.
Solvency compliance software built as simply as your BAS or tax return software.
Affordable, straightforward, and consistent — BoardSolvency does one job well: telling directors, in plain terms, whether the business can keep trading. No accounting degree required, and no more complexity than a director actually needs to do their job properly.
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Built for the board table, not the finance team: the same report a director reads in a board meeting is the one that stands up as evidence of active, informed governance if it's ever needed.
What you get: historical trading data, a rolling three-year forecast, a live solvency dashboard, and a plain-English quarterly board report — all from one straightforward setup.
Who it's for: directors of single-entity SMEs — from small owner-operated businesses through to mid-size companies with a CFO — who need a genuine, defensible answer to "are we solvent."