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Insolvency risks higher for SMEs

Insolvency risks higher for SMEs

While Australian companies are generally confident about economic growth, 60 per cent are expecting high levels of insolvencies over the coming 12 months - with SMEs seen as the most vulnerable…

While Australian companies are generally confident about economic growth, 60 per cent are expecting high levels of insolvencies over the coming 12 months - with SMEs seen as the most vulnerable to financial ruin - according to an international law firm report.

The report also found that 80 per cent of Australian companies expect it will be another 18 months or more before liquidity returns to pre-crisis levels, and liquidity is also considered one of the principal risk factors (at 54 per cent) followed by the market (34 per cent), and regulation (23 per cent).

Steven Palmer, a Melbourne-based partner at Norton Rose, which conducted the report, said: "A lot of long-term problems have been financed (or refinanced) on a short-term basis," said Palmer, who noted that there is still significant pressure in a number of sectors including retail, aged care and property and infrastructure.

>> This article was first published in Risk Management Magazine. For daily news updates on Risk & Compliance, visit www.riskmanagementmagazine.com.au

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