This time last year, ASIC revealed that of the 7,613 reports it had received from external administrators in the 2017–18 financial year, poor cash flow or abnormally high cash use were found to be the main causes for a business collapsing — prevalent in 49 per cent of cases.
Trading losses came in third, contributing to 39 per cent of company failures that year.
ASIC is yet to release its report for the most recent financial year, which My Business was advised will be made published before the end of 2019.
Commenting on the initial submissions to its Insolvency Practices Inquiry, the Australian Small Business and Family Enterprise Ombudsman said it was already clear that many business owners are leaving it too late to seek help.
“It is crucial that small and family businesses experiencing financial difficulties understand they don’t have to go it alone,” said ombudsman Kate Carnell.
“What we know is the sooner small and family businesses get help, the more likely it is they can achieve a more favourable outcome.
“[They] should lean on their trusted advisers, like your accountant, especially when financial concerns arise.”
Ms Carnell said that more than 230 survey responses have been received since the inquiry was launched on 10 October, adding “we expect that number to grow”.
The ASBFEO is due to publish its final report in February 2020.
Help available for SMEs
In a bid to help small and medium businesses grappling with cash flow and the factors that weigh on it, My Business is hosting a free webcast, giving business owners and operators, as well as their advisers, the chance to put their questions to those in the know.
Joining the panel are the ATO’s assistant commissioner for small business experience, Andrew Watson; the general manager of Australian software solutions provider Business Continuum, Shelley Foster; and Keith Payne, the regional head of client development and customer success for expenses, travel and invoice management provider SAP Concur.
Among the issues up for discussion are late payments and how to minimise them, expenses management, addressing and preventing human errors, tax and the role that technology can play in giving early visibility to problem areas.
There will also be a Q&A session to allow businesses to raise their own questions directly with the panel.
The webcast will be broadcast live at 11am on Thursday, 21 November 2019. Registrations can be made for free via the webcast page on the My Business website.