AI has become part of the conversation in almost every sector, and the insolvency profession is no different. Directors are using it, accountants are using it, and it has a place behind the scenes in the work of insolvency practitioners too.

This article looks at where AI is being used, what it does well, where it falls short, and why, when a business is under real pressure, the directors should be speaking to a person.

The directors’ point of view.

For a business owner worried about cash flow, the appeal is obvious. AI tools are quick, free and available at any hour, including the small hours when they can’t sleep, worrying about the business. At 2 am, they can ask a question, get a clear, confident answer in seconds, and for a brief moment, feel comforted and reassured.

The problem is, a confident answer does not always mean a correct answer. An AI tool doesn’t know the full picture of a company’s finances, its creditors, its contracts or what a director has personally guaranteed (only the information it’s been given). It can give general answers on HMRC arrears or director duties that sound sensible but don’t fit the situation in front of the director.

There is also a simple point about responsibility. If a decision goes wrong, nobody can blame the AI. The responsibility stays with the directors, whatever the tool suggests. Decisions like paying one creditor ahead of others or taking money out through an overdrawn director’s loan account can have serious consequences when the company is struggling.

AI can be a good way to organise your thoughts and prepare questions. In our opinion, it works best as a starting point, with a proper adviser alongside.

The accountants’ point of view.

Accountants are using AI too, often to speed up routine work and to spot unusual patterns in client data. A late filing, a growing creditor balance or a change in payment habits can all be picked up faster than before.

What AI can’t do is explain the story behind the numbers. The accountant knows the director, the history of the business and the pressures it has faced. That context is what turns a flag on a screen into a meaningful conversation.

Accountants are also seeing clients arrive with more information than they once did, some of it drawn from AI tools. It has become part of the landscape now, sitting alongside the trusted relationship the accountant has built over years.

Whether the warning signs come from an AI tool or a conversation with the client, the accountant is best placed to read them. They know when a pattern is more than a blip, and when it may be time to bring in an insolvency practitioner. At that point, an IP can work alongside them to set out the facts and talk through the options, while the accountant stays the trusted adviser throughout.

The insolvency practitioners’ point of view.

Within the insolvency profession, AI is a useful behind-the-scenes tool. It can support research, help identify patterns and anomalies in large volumes of information, and potentially help with the detection of fraud. Used well, it saves time and makes that groundwork more thorough.

What it cannot replace is experience. Insolvency practitioners who have worked in this field for many years already recognise the common signs of a struggling business because they have seen them first-hand across hundreds of cases. That knowledge comes from people, not software.

Experience also shapes judgement. Every business is different, and every set of circumstances needs to be looked at as a whole: the numbers, the people, the history, the options and what the director wants to achieve. AI can highlight a pattern, but it takes an experienced, qualified professional to see how everything links together and what it means for that director, in that business.

Information helps, but it’s the humans who help with the situation.

When a business is struggling, sometimes just one poor decision away from turning insolvent, the directors aren’t looking for information; they are seeking out a lifeline. They want to be heard, to talk through what is happening and to understand what could come next. They want a human being who will listen without judgement and give them a straight answer – and if possible, a solution to keep moving forward.

AI can help with the information, but it’s humans who help with the situation.

Directors often tell the TruSolv team, “I wish I’d come to you sooner.” No one has ever said they wish they hadn’t come at all, and they’ve certainly not said that AI had the answers they needed! The earlier our team is made aware of what is going on in a business, the more options may be available.

If you have concerns about your company, or a client’s, come and speak with the team. Call 0808 196 8676 or email help@trusolv.co.uk.