Whilst interest rates in Australia are at historic lows and we remain in relatively good financial shape when compared to other Western Economies, what lies beneath needs to be understood.
During the calendar years 2010, 2011 and 2012 we have seen corporate insolvency levels across Australia increase on average at almost 4.5% per annum. Further, many SMEs are also reported continued periods of reduced or static profits.
Interestingly, household debt levels also remain at near historical highs, despite some media commentary to the contrary. Will this lead to an increase in personal insolvencies in Australia? In Western Sydney, for example, Bankruptcy and other forms of personal insolvency including Part IX arrangements are at a record.
Many family owned businesses are finding their bankers increasingly difficult to deal with .Some business owners have reported that they have been asked to find another bank despite having a long term and successful relationship with their existing financial institution. Is this really the banks concern regarding the financial health of these businesses or simply an example of the banks focus on their own credit rating?
It is clear that some industries are facing particular challenges in the current environment .Accordingly at Jones Partners, we are commissioning a definitive report on the state of the Australian Economy from an insolvency perspective.The report will be the first of its kind and seek to set a new narrative amongst lenders and professional advisers and the business community generally in relation to insolvency trends and the economic outlook.
This report will address;
- Historical personal and corporate insolvency trends
- Reasons for major company liquidations, receiverships, and voluntary administrations
- Trends in Bankruptcies and Personal Insolvency Agreements
- Industries at risk
We are delighted to be be associated with IBISWorld, who will be looking at these issues and other issues surrounding various insolvency trends in Australia and overseas.This project will be launched at an exciting presentation by Phil Ruthven Chairman and founder of Ibis World at an exclusive event hosted by Jones Partners on the 3 July, 2013.The function is already fully booked however a video excerpt will be available via download in due course
Phil Ruthven says that the risks associated with company failures can be attributed as to ⅔ management issues relating to the company itself and only ⅓ to the industry. Phil says that a bad company in a bad industry is sure to fail whilst a well-run company even in a tough industry has every chance of succeeding and possibly increasing market share. The presentation will look specifically at what it takes for companies to be successful in tough times and look at those industries under particular threat having a regard to the current micro and macro-economic trends facing Australia. there will also be a focus on the current uncertainties surrounding the political scene and the impact it is having on small and medium businesses.
I am looking forward to releasing the outcome of the project and I invite interested parties to contact me or make comments below
In addition I have created a LinkedIn discussion group called “Business At Risk” to encourage engagement in the project