Insolvencies jump 43 per cent in September quarter: ASIC
The latest ASIC statistics have shown that insolvencies are still on the rise with accommodation and food services seeing one of the highest increases from the same period last year.
The corporate regulator has released the Australian insolvency statistics for the period up to 29 September 2024, with the latest statistics indicating there was a 43 per cent increase in total insolvencies in the first three months of the 2024–25 financial year from the same period in the previous financial year.
The statistics showed that for the period from 1 July to 29 September, 3,568 companies had entered external administration or had a controller appointed. This was 1073 more companies that entered insolvency than during the September quarter in 2023.
While the construction sector still accounted for the highest number of insolvencies at 876 for the first quarter, the rate of growth in insolvencies for this industry has slowed substantially, increasing only 11.6 per cent when compared to the same period last year.
Accommodation and food services, on the other hand, have seen a significant increase in the rate of insolvencies, with the sector seeing more than double the number of insolvencies for the latest quarter compared to the September quarter in 2023.
The statistics indicated a total of 695 insolvencies in the accommodation and food services sector in the first quarter of 2024–25, an increase of 105 per cent from the same period in 2023.
Other services were the sector with the third highest number of businesses entering insolvency at 345, followed by professional, scientific and technical services at 233.
While the number of insolvencies in the healthcare and social assistance sector remained relatively low at 102, this was double the number of insolvencies for the same quarter last year.
The rate of insolvencies also doubled for wholesale trade and arts and recreation services, despite the total number for these industries remaining low.
CreditorWatch recently reported that a surge in late payments was impacting multiple sectors across Australia in its Business Risk Index for August.
The index indicated that 96 per cent of large businesses and 74 per cent of small businesses have experienced late or overdue payments.
CreditorWatch chief executive Patrick Coghlan said the increase in late payments is creating significant strain across sectors, with many businesses struggling to maintain consistent cash flow as overdue invoices pile up.
“Late payments are more than an inconvenience, they’ve become a critical issue for businesses, affecting cash flow and operational stability, and even their long-term survival,” Coghlan said.
“This is placing enormous pressure on companies, particularly small and medium-sized enterprises, which often lack the financial buffers, negotiating power and collections capabilities that larger corporations have.”
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