Identifying the Early Signs of Financial Distress

Vigilance in detecting red flags—such as declining cash flow, increasing debt and falling sales—can help prevent severe outcomes, like bankruptcy, and provide an opportunity for management to make necessary adjustments, restructure operations, or seek external help.

5 minute read January 15, 2026 at 12:28 PM
By
Kirsten Ulzheimer
Identifying the Early Signs of Financial Distress

Bankruptcy can have a significant impact on a company’s owners, investors, employees and lenders. Identifying signs of financial distress is an essential step in ensuring the long-term survival of a business in today’s complex economic landscape.

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