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Early identification of operational distress is key

March 22, 2024 / 4 min read

Businesses don’t fail overnight — they fail to recognize warning signs. In Accounting Today, Sandor Jacobson shares 12 areas of operational distress businesses often miss and proactive measures that may improve chances for a successful turnaround.

Businesses usually don’t fail overnight. Instead, they fail to recognize and proactively react to warning signs. Poor profitability, declining revenue, loan covenant defaults, and vendor payment stretching are obvious warning signs.

While every company is different, there are 12 operational areas distressed businesses often miss, which can foretell a deteriorating financial condition. Financial executives would be well served to keep these in mind to help clients address underlying causes of problems. Proactive measures may improve chances for a successful turnaround.

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