The Australian Small Business and Family Ombudsman’s Insolvency Practices Inquiry final report, released following an inquiry by the ombudsman into insolvency proceedings in Australia, found the current insolvency system did not do enough to help small businesses in distress before they reached crisis point.
“Our inquiry has found that the system as it stands does not work for small businesses,” ASBFEO Kate Carnell said.
“Instead of getting the support they need to turn it around, small businesses too often find themselves on an express train to winding up with no control over the process.”
Among a number of measures recommended to improve insolvency practices, the report suggested businesses in distress have access to a voucher of up to $5,000 to help them obtain a tailored plan from an accredited adviser to get their finances in order.
Ms Carnell said such advice could potentially mean the difference between a business going into liquidation and being able to restructure its debts, but the cost of advice was prohibitive for business owners already experiencing financial difficulties.
“We know the sooner a small business seeks help, the more likely it is they can achieve a restructure or turnaround,” Ms Carnell said.
“But cash flow issues, compounded by falling revenue, may mean those small businesses can’t afford the professional financial advice they need. The ramifications of this could be devastating, both for the business and its owner and family, down the line.”
Ms Carnell said the recommendations of the inquiry were “critical” for the government to act on, given that due to the COVID-19 crisis, “trading conditions are the worst we’ve seen since the Great Depression and many small businesses won’t survive”.
The news comes following the government’s announcement on Tuesday that its JobKeeper scheme would be wound back to $1,200 per fortnight for full-time employees and $750 for part-time employees from September.
Eligibility criteria for the scheme would also be tightened, with businesses having to demonstrate at least a 30 per cent decline in revenue in both the June and September quarters in order to remain eligible for JobKeeper.
Announcing the new conditions for the scheme, Treasurer Josh Frydenberg conceded that “it’s fair to say the unemployment rate will continue to rise” as less businesses remained eligible for JobKeeper.
Why doesnt the ombudsman forego wages and return her past salary for past mistakes she made.
I doubt many financial/investment advisers would specialise in pre-insolvency for a company. An insolvency accountant would be a better place to look.
Missed the point entirely. We are trying to save companies from insolvency not set them up for insolvency. Financial Advisers are qualified to give business advice including that of cashflow and budgeting.
Sure , just have the government pay us, the way they pay doctors. We will be delighted to not charge the clients.