The early warning signs a turnaround consultant looks for

1. Receivables lengthening quietly

Days sales outstanding creeping up by a few days each quarter is easy to miss and expensive to ignore. It rarely reverses on its own, because the causes — weak collection discipline, disputes nobody closed, customers with their own cash problems — compound. Track DSO monthly and look at the trend, not the number.

2. Margin drifting while revenue holds

Flat revenue with a slowly falling gross margin usually means discounting has become the default sales tool. Revenue keeps everyone calm while the business earns less on every rupee. Look at margin by customer and by product line; the drift is almost always concentrated somewhere specific.

3. Concentration in the order book

If the top three customers are a growing share of revenue, your risk profile has changed even if nothing feels different. This is a strategic exposure, not just a commercial one, and it takes several quarters to fix — which is exactly why it needs attention before it becomes urgent.

4. Supplier payments stretching

When payables stretch to fund operations, the business has started borrowing from suppliers at an unfavourable and undocumented rate. It also erodes exactly the goodwill you will need if things get tighter. Treat a stretch in payables as a cash-flow alarm, not a cash-flow solution.

5. Bad news stops arriving

The least financial signal and often the earliest. When department heads stop raising problems, it usually means the last few people who did paid a price for it. By the time issues only surface once they are unavoidable, the business has lost its most valuable early-warning system.

When to make the call

The right moment to bring in outside help is when cash starts tightening or a covenant looks at risk — not after a default. Early calls leave options on the table: renegotiation, a cost reset, an orderly disposal, a conversation with a lender who still has reason to be patient. Late calls leave only the expensive ones.