The accommodation and food services industry saw a 21 per cent spike in corporate insolvency appointments over the 2017–18 financial year, while the retail trade sector saw a 19 per cent increase, according to Worrells Solvency and Forensic Accountants latest insolvency report.
“Our experience in the last 12 months is indicative of what the Australian Securities and Investments Commission’s statistics report,” said Worrells partner Chris Cook.
“The enquiries and discussions we have daily with business owners and their advisors tells me that there’s more stress and pressure to come in the construction and retail industry and trading environments.”
The makeup of the top five industries in the corporate insolvency analysis includes other (business and personal) services, construction, accommodation and food services, retail trade, and transport, postal and warehousing.
Last year, Kevin San & Associates director Kevin San told Accountants Daily he noticed a notable drop in revenue for clients in brick-and-mortar cafés, restaurants and retail in the Sydney market, highlighting the difficulties clients are facing in an “oversaturated market”.
The main business-related cause of personal insolvency was put down to economic conditions affecting industry, including competition and price cutting, credit restrictions, fall in prices, increases in costs, with 27 per cent citing that as the main reason.
Further, six percent of debtors cited “lack of business ability including underquoting or failure to assess potential of business” as reason for failure.
The top three corporate insolvency activity states of NSW, Victoria, and Queensland all shared the same top five industry profile of other (business and personal) services: construction; accommodation and food services; retail trade; and transport, postal, and warehousing, continuing the trend from the previous corresponding period.
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.