Small business owners in financial trouble are leaving it too late to seek help, small business ombudsman Kate Carnell warns.
As small business insolvencies spike leading into Christmas, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has held the first meeting of its insolvency practices inquiry reference group, which is probing whether SMEs are being shortchanged by overzealous liquidators with conflicted interests.
The ombudsman’s office has received more than 200 responses to its initial survey callout, which went live last month, and an additional 20 formal submissions, Carnell said.
One of the initial findings considered by the reference group, which is chaired by former Nationals senator John Williams, is small business owners appear to be trying to tough out difficult trading conditions rather than seeking help.
As Carnell explained in a statement circulated Monday, this is making it more difficult for firms to find a lifeline when they need it most.
“It is crucial that small and family businesses experiencing financial difficulties understand they don’t have to go it alone,” Carnell said.
“[Firms] should lean on their trusted advisors, like your accountant, especially when financial concerns arise.”
The ombudsman’s inquiry is considering a range of potential issues with insolvency practices and their effect on small business.
This includes the way small business owners are kept in the loop once they hand their companies over to administrators, and whether liquidators are incentivised to recommend liquidations to boost their own fees.
It’s pertinent timing. As new concerns emerge about the direction Australia’s economy is heading leading into 2020, CreditorWatch figures published earlier this month revealed a 20% spike in SME insolvencies for the September quarter.
Insolvency practitioners are relishing increased revenues, as the ABC has recently reported, but that’s bad news for small business owners.
Debt recovery firm Prushka published figures last week which argues SMEs are tightening their growth ambitions for 2020, in what should be seen as a “canary in the coal mine” of sorts.