What is the term for when a business can no longer pay its debts?

The term for when a business can no longer pay its debts is insolvency. This situation occurs when a company's liabilities exceed its assets, meaning it cannot meet its financial obligations as they come due. Insolvency can lead to significant consequences, such as bankruptcy proceedings or liquidation, where the assets of the business are sold off to pay creditors.

In contrast, liquidity refers to the availability of cash or easily convertible assets to meet short-term obligations. While a lack of liquidity can contribute to insolvency, they are not the same. Outflow generally refers to the movement of funds out of a business, often in relation to expenses or investments, and does not specifically define the inability to pay debts. A cashflow forecast is a financial tool used to estimate future cash inflows and outflows, helping a business plan accordingly, but it also does not capture the state of being unable to pay debts directly. Thus, insolvency is the precise term that describes the condition of a business that faces an unmanageable debt situation.