Rising Bankruptcies: Three Questions Before You Approve Your 2027 Budget

The October 22 release from the U.S. Courts reports 27,054 business bankruptcy filings in the 12 months ending September 30, 2026, up from 24,039 a year earlier—a 12.5% increase. The chart compares the same September-ending period in each year, not filings during September alone. Table F-2 provides the underlying business and nonbusiness breakdown.

That increase cannot tell you whether your company—or a customer—will fail. A filing count is not a business failure rate. Our takeaway is narrower: as owners and boards prepare next year's budgets, they should challenge the payment and financing assumptions that could leave the business short of cash. The three questions below turn that concern into a concrete planning discussion.

An annual profit target does not show whether cash will be available on the day payroll, rent, or debt service comes due. Ask the finance team to identify the receipts and financing events that make the budget work, including:

• Customer collections: which large payments are expected, on what dates, and how those dates compare with the customer's actual payment history.
• Financing: which facilities are available now, which commitments have conditions, and which extensions or new funds are still only under discussion.
• Asset sales or other one-time receipts: what must happen before the company can actually use the proceeds.

For each material assumption, record the amount, expected date, supporting evidence, and person responsible for confirming it. Keep an expected receipt separate from cash already available. The distinction between reported value and usable cash also underlies our discussion of private credit and the test of repayment.

Now move the dates. What if a major customer pays later, a refinancing takes longer, or an asset sale does not close when expected? Run those changes through a weekly cash forecast. The useful answers are how much funding would be needed, when it would be needed, and whether a credible source is available.

Consider a hypothetical example, not a CMBG case: the forecast assumes a customer pays before payroll, but the payment arrives two weeks late. If the receipt still falls within the same quarter, quarterly revenue may look unchanged while the company faces an immediate cash shortfall. The question is not simply whether the customer will eventually pay. It is how the business meets its obligations in the meantime.

A cash-runway calculator can help illustrate a simplified downside scenario. It cannot establish solvency or replace a company-specific forecast with dated obligations, cash restrictions, and financing conditions. Test assumptions against actual collections and spending as new information arrives.

A downside forecast is incomplete without a response. Before the budget is approved, agree on the developments that would require management to revisit the plan and report to the board. Examples to evaluate with the company's advisors include:

• A financing commitment remains unresolved at the date needed to complete an alternative plan.
• Actual collections fall behind the forecast enough to threaten an upcoming obligation.
• Projected cash falls below a company-specific operating cushion agreed with the appropriate advisors.

These are planning prompts, not universal thresholds or legal tests. Each trigger needs a named owner, a reporting date, and a defined next discussion. That might mean reassessing spending, discussing financing with a lender, or seeking turnaround advisory support—not automatically choosing a bankruptcy or sale process.

The point of the filing data is not that your business will be next. It is that a budget should include a response if the assumptions supporting it stop holding. Before approving the 2027 plan, ask management to show the critical cash assumptions, the downside funding gap, and the agreed triggers for action. If that exercise exposes an unresolved shortfall, contact CMBG to discuss the facts before acting.