Over the past 12 months, Australia has seen a sharp rise in small-to-medium enterprise (SME) insolvencies. Several factors are driving this trend:
- ATO enforcement: After years of pandemic forbearance, the tax office is actively pursuing overdue debts.
- Rising interest rates: Increased borrowing costs make it harder for SMEs to manage cash flow.
- Labour and supply chain pressures: Costs have risen faster than revenues for many businesses.
- Shifts in consumer demand: Post-COVID habits have disrupted once-stable sectors.
For SMEs, the implications are clear: cash flow monitoring, debt management, and early engagement with advisors are more critical than ever. For creditors and financiers, it means being prepared for more claims, disputes, and restructuring proposals.
As insolvency practitioners, our role is not just to close companies but to help stakeholders navigate these pressures fairly and transparently. In many cases, early intervention allows for restructuring or informal workouts that avoid liquidation altogether.
The numbers may look grim, but proactive steps can make the difference between collapse and survival.
For those working with SMEs—are you seeing the same pressure points in your client base?
