Sydney, September 24, 2009 – Insolvency practitioners are warning that small and medium-sized (SMEs) companies are yet to feel the full effects of economic upheaval and low availability of finance.
RSM Bird Cameron’s partner of turnaround and insolvency Peter Marsden said that the number of insolvency cases in the firm’s Sydney practice has doubled in the last several months.
“When the GFC first hit, the immediate impact was felt by large corporations that fell into receivership but almost 12 months on, we see a marked increase in the number of SMEs struggling financially,” Mr Marsden said.
Mr Marsden believes a contributing factor to this is that SMEs are highly reliant on banks or personal finances to raise capital for capital investments and working capital.
“Larger corporations have many options through which they can raise capital and these range from raising capital via share issues, selling of assets to reducing costs of overheads. SMEs on the other hand are particularly struggling as a result of the sharp decline in new orders and the knock-on effects of insolvencies of their customers or suppliers. Companies with private-equity owners are particularly at risk,” Mr Marsden added.
“The Australian economy hangs in balance and all businesses both big and small need to be mindful that when the various stimulus packages end, interest rates start to climb and the government looks to reduce their massive deficit, there are still difficult times ahead and the road to recovery is far from over.”
About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia serving the middle market with technical and commercial expertise over the full range of specialist corporate and business advisory services including assurance and advisory, corporate finance, taxation consulting and turnaround and insolvency.
RSM Bird Cameron is a core member firm of RSM International, the seventh largest accounting and consulting organisation in the world.