Decrease in small business insolvencies suggests SME industry improvement


By Loren Webb

Prushka Fast Debt Recovery, one of Australia’s largest debt recovery agencies, has released new data that shows there has been a slight decrease in company wind-up figures since the previous quarter (Apr-Jun), suggesting a more positive outlook on the horizon for Australian small businesses.

The data is sourced from court records, and it reveals that 940 Australian businesses issued Notices of Winding up Applications in the July-September quarter.

This figure has decreased by 8 per cent compared to the last quarter, and by 6 per cent year-on-year.

Victoria remains the state with the largest number of applications at 328, followed by New South Wales with 320.

Surprisingly, private wind-ups account of for the largest amount of petitions this quarter, with 44 per cent of total petitions issued. The combined percentage of ATO and Other Government wind ups account for just over half (56 per cent) of total wind up figures.

Roger Mendelson, CEO of Prushka, said the slight decrease in figures confirmed the businesses viewpoint that the economy is sound, despite broader perceptions.

“While it is important to remember that these figures represent the end of the debt collection process and only a small percentage of business debts reach this point, this underlying downward trend we are seeing provides an excellent overview of the SME sector and indicates an improvement in SME financial health.

“There are no surprises when it comes to the state allocations, with both NSW and Victoria reporting flat business conditions this year, a flow on effect of slow wage growth and high household debt.

“The total of ATO and other government wind ups is also in accordance with long term trends as government entities are more inclined to initiate winding up action as part of a process.

“The private industry tends to take a more considered approach to winding up, only if it is likely to result in a return higher than the cost of doing so.”

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