Small to medium business insolvencies dominate external administrator’s reports, according to an ASIC’s report of corporate insolvencies for the 2017-18 financial year.
This year’s findings are consistent with the last two, revealing the top reasons for businesses failing as; inadequate cash flow or high cash use, this cause was nominated in almost half (49 per cent) of reports, with poor strategic management of the business coming in second (46 per cent).
Which industries are seeing the most insolvencies?
Small businesses (those with 20 employees or less) make up the majority of businesses falling into insolvency, a proportion of 78 per cent.
A further breakdown of the figures shows that construction businesses made up 22 per cent of insolvencies with accommodation and food services making up another 14 per cent – an increase on last year’s figures
How are we supporting the SME community?
The subject of cashflow finance for small business is something of a hot topic at the moment. The Federal Government announcing a $2 billion Securitisation plan to help improve SME access to capital. And the Small Business Ombudsman is conducting a review into unfair and late payments, but the concern is still very real that a lack of funding options is holding small business back. This issue is highlighted again in the ASIC data (finding that the proportion of businesses reporting cashflow issues increased from 47% of cases in 2016-17 to 49% of cases in 2017-18).
Are we doing enough?
We welcome initiatives that enable the small business community and are strong supporters of Small Business Ombudsman, Kate Carnell, a passionate advocate for the sector. A lack of access to funding options at the right time can be make or break for a small business. Invoice finance can be a short, or longer-term option that can help businesses maintain a steady cashflow without going into further debt.
Talk to Apricity today about how our invoice finance solution could help keep your business afloat by giving you access to the funds from your invoices sooner.