According to the Informa D&B barometer, the first seven months of 2026 saw 1,216 new insolvency cases, up 5% on the previous year. Over the same period, company formations fell 4.2% to around 32,300 new firms. After 2025 set a record, with 53,030 companies created, business activity has been slowing since the start of 2026.
I am not writing this to frighten anyone. I am writing it because, in my years of coaching, I have rarely seen a business fail overnight. Almost always, the signs were in the numbers six, twelve or eighteen months earlier. The trouble is that nobody was looking at them regularly, or they looked and chose to believe next month would be better.
Why businesses notice too late
Statistics Portugal (INE) data for 2024 show that 73.8% of companies survive their first year, but only 47.7% reach the end of their third. The fragility is real, especially early on. And one factor makes everything worse: late payment. The 2026 Informa D&B payment behaviour study found that only 20.2% of companies in Portugal pay within agreed terms, which puts the country second to last out of 37.
The delays are not small. According to the same study, 65.2% of companies pay up to 30 days late, 9% between 30 and 90 days late and 5.6% more than 90 days late. Among large companies, only 4% pay on time. For an SME supplying large customers, that means a significant part of its working capital is, in practice, on loan to the people who buy from it.
In practice, a business can have sales, customers and even a profit on its income statement, and still run out of cash to pay wages. Profit is an opinion; cash in the bank is a fact. Most owners watch turnover. Few look, every week, at cash flow and at the indicators that predict it.
Financial warning signs
These are the indicators I ask every owner to track, ideally on a single sheet updated weekly:
- Debtor days going up. If customers take longer and longer to pay, your cash is leaving the business to finance theirs.
- Creditor days going up without having been negotiated. It means the business is using its suppliers as a bank.
- Gross margin falling for three months in a row, even with steady sales.
- Permanent use of the overdraft or revolving credit line. A short term facility that is always at its limit is no longer a cushion; it has become a dependency.
- Arrears on tax or social security. This is often the first serious sign.
- A 13 week cash flow forecast that goes negative in any week.
Operational and commercial signs
Not every sign is in the accounts. Some appear first in day to day operations:
- Growing reliance on one or two customers.
- Fewer leads or proposals, even if this month's invoicing still looks normal.
- Discounts used more and more often to close sales.
- Key people leaving, or absence rising.
- Slow moving stock building up.
- The owner spending more time firefighting than managing.
The 5 ways to increase profit help here too, in reverse. If leads, conversion rate, transactions per customer, average sale and margin are all slipping at once, even slightly, the combined effect on profit is large. Imagine a hypothetical business where each of those five numbers drops by 5%: profit does not fall by 5%, it falls by much more.
A simple dashboard to act in time
The fix is not complicated. It takes discipline, not expensive software. I suggest four steps:
- 1. Pick eight to ten indicators from the lists above, the ones most relevant to your business.
- 2. Set an alert threshold for each, for example debtor days above 60.
- 3. Review the dashboard every week, at the same time, for 30 minutes, with whoever looks after finance.
- 4. Attach a predefined action to every alert. If a customer goes past terms, who calls, when, and what happens next.
The dashboard is worthless if nobody owns it. Decide who updates it, who reviews it and who makes the call when an alert fires. In most of the SMEs I work with, the first win is not a better number: it is the owner knowing, every Monday, where the cash is and where it will be three months from now.
When one sign appears, there is time to negotiate with suppliers, review prices, cut costs or arrange finance on sensible terms. When they all appear together, the options are few and expensive.
One action for this week
Build a cash flow forecast for the next 13 weeks: opening balance, expected receipts week by week (being realistic about customers paying late) and planned payments. If any week turns negative, you know where to focus. If none does, keep the sheet and update it every Friday.
If you would like to build this dashboard with support, the ActionCOACH Porto team would be glad to talk. In 1:1 Coaching we work on exactly this: systems, metrics and accountability, so that decisions are made in time.