Foreword — The Research Behind BoardSolvency

This platform did not begin in a university or a consulting firm. It began with the experience of small business closure — my own, and the closures I witnessed around me over many years of operating and advising in the SME sector.

What I observed, again and again, was that businesses were not forced to close because their owners were incompetent or their products were poor. They were forced to close because nobody had ever shown them how much revenue they needed to generate each period to pay every bill — not just operating expenses, but loan repayments, creditor commitments, tax obligations, and private drawings. The profit and loss statement told them how profitable they were. The cashflow statement told them what had happened. Neither told them what they needed to do next to survive.

That gap — between what the accounting profession measures and what a director or business owner actually needs to know — became the obsession of the next decade of my working life. BoardSolvency is the result.

In April 2016 I completed my initial analysis of Australian business startups and closures. The numbers were staggering and have stayed with me ever since.

My 2016 estimate — 250,000 sole traders exiting annually at $25,000 each in capital commitments, plus 50,000 micro businesses at $100,000 each — produced a figure of approximately $11.25 billion in losses per year in Australia alone. Extrapolated to the United States, the equivalent figure would exceed $20 billion annually. These are not abstract economic statistics. Each number represents grief, family breakdown, loss of a home, and in some cases the end of a life.

That observation was written in 2025. By December 2024, ASIC had finally acted. The regulatory learning — delayed by nearly a decade — had arrived.

My research led me deep into the history of how financial analysis and accounting software developed — particularly in the United States. What I found was a profession shaped by a specific and deeply entrenched culture: profit maximisation and compliance reporting for taxation authorities.

Clayton Christensen's work on disruptive innovation — particularly The Innovator's Dilemma (1997) and Competing Against Luck (2016) — helped me understand how industries get locked into serving their best customers while neglecting an unserved need. The accounting software industry did exactly this. Xero, MYOB, and QuickBooks all evolved to serve the compliance culture: reporting profit to the ATO, producing true and fair financial statements for auditors and shareholders. They are brilliantly designed for that purpose. But what they do is not cashflow management for trading survival.

Milton Friedman's 1970s doctrine of profit maximisation for shareholders — documented by Simon Sinek in The Infinite Game — became the operating philosophy of finance broadly. CFOs and auditors focused on the profit and loss statement and the balance sheet. The cashflow statement became an afterthought. Yet it is the cashflow statement that tells you whether a business can pay its bills next month.

Professor Roger Martin's work on the difference between strategy and planning gave me the language to express why this matters at board level. Managers spend enormous effort correcting estimated expenses and sales expectations in operational plans — but those plans are built on profit logic, not cashflow logic. They do not ask the right question: how much revenue must this business generate to pay every cash commitment in this period?

Over seven years of research and iteration, I developed what I call the Sustainable Cashflow equation. It is deceptively simple but structurally different from anything in standard financial practice. In plain terms, the Sustainable Cashflow Formula is a test of balanced cashflow: is all cash IN equal to or greater than all cash OUT, every trading period.

I will be honest about the journey. For most of the years I spent on this research, the response from accountants, advisors, and financial professionals was indifference at best. The cashflow management culture I was advocating was not the culture of the profession. The profit culture dominated, and it still dominates. CFO accountants and experienced business owners understood the importance of the cashflow statement — but they were busy, and the tools they used did not require them to think this way.

Professor Amy Edmondson's research on how organisations resist acknowledging dangerous signals helped me understand why. In her book Right Kind of Wrong (2023), she documents how intelligent, experienced professionals can systematically fail to act on evidence of risk — not from malice, but from the cultural pressure to confirm existing practice. The financial profession's focus on profit reporting is not wrong. It is simply incomplete for the purpose of director governance.

The frustration of those years — of knowing that the gap existed, that businesses were being forced to close unnecessarily, and that the profession was not addressing it — is what drove this project through to completion. The research was always right. What was missing was the regulatory moment that would make the profession listen.

That moment arrived in December 2024.

In December 2024, the Australian Securities and Investments Commission updated Regulatory Guide 217 — Duty to Prevent Insolvent Trading. The update significantly expanded ASIC's guidance on what directors are now expected to do to monitor solvency, and confirmed that the obligation is proactive — not reactive.

This is the regulatory moment the research had been waiting for. The obligation that BoardSolvency was built to meet — continuous, independent, documented solvency monitoring — is now a legal requirement for every director in Australia.

BoardSolvency did not create this obligation. ASIC confirmed it. The platform simply gives directors the tool to meet it — independently, continuously, and in plain language that does not require an accounting degree to understand.

The research was always right. The regulatory framework has now caught up with it.