is zip pay going bankrupt ?, page-2

A little more than 12 months ago ZIP announced plans to move from growth to profitability, in response to the capital markets. It said it would sign more merchants and get more customers, as well as pay attention to its Balance Sheet and cost base. It has done all of those things and the next report due in 10 days will show more insight as to how it has worked. It would be pessimistic to think that there has not been more growth in customers and turnover, but optimistic to think that bad debt and costs have not risen. It needs to find a gap between its revenues and outgoings, to accrue cash and become profitable but it is not capable of being profitable while it carries the debt it does. If it is marginally cashflow positive but not profitable, it remains on borrowed time, if it becomes both profitable and cashflow positive, its prospects are good, but if it is neither, then it is business as usual until somebody pulls the pin and the market will respond as it has. ZIP is an Australian company, so it can't go into bankruptcy as in the USA (Chapter 7 or Chapter 11) but either the directors or lenders could place it into Administration on the basis that it could not pay its debts, after which its assets could be sold and/or the company wound up. IMO that is a long way off, but remains a possibility until it finds a profitable business model given its current circumstances.

Its challenges are to become cashflow positive, extinguish debt to stave off increasing servicing cost, refinance existing debt, find alternative revenue sources, limit bad debt expense without impacting necessary growth, achieve economies of scale and limit other/admin expenses, as well as continuing to find capital to spend, to move its business proposition forward