The number of debtors across the nation is on the rise, echoing the increase in the number of SME wind-ups in recent months as reported by the Australian Securities and Investments Commission (ASIC).
An increase in the number of companies in debt
ASIC statistics for the end of the last financial year reveal a significant increase in the number of Australian companies declaring insolvency.
2,734 companies entered into voluntary administration in the three months to June, compared to 1,971 in the previous quarter.
Soaring number of SMEs being wound up by the Australian Tax Office
In addition to this, 396 wind-up applications were filed with ASIC in July this year, with another 40 announced in mid-August. In May alone, 722 applications were made.
The threshold for winding up has also decreased from $300,000 to a mere $30,000.
While wind-up notices do not necessarily force businesses to close, it is predicted that small business insolvencies will soar in the coming months. This is because wind-up applications are a highly accurate indicator of insolvencies.
The link between business and personal debt
Unfortunately, business debt often comes hand-in-hand with personal debt. A business’s insolvency can have a ripple effect on the personal solvency of the owners and workers employed within the company.
Although the rate of personal bankruptcies in Australia is currently relatively low, business insolvencies within the Australian economy is predicted to affect the labour market in upcoming months.
Get the help you need
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- Debt Agreement
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Our team of licensed and insured insolvency practitioners have had years of experience in helping thousands of everyday Australians and business owners find a viable and affordable debt solution for their situation.
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To learn more about our services, or simply receive professional debt advice, speak to one of our qualified financial advisers for free today on 1800 003 883.