Access to advice critical to small business restructuring, says Senator
Providing more assistance and support to small businesses will be an important part of improving the small business restructuring pathway, says Senator Deborah O’Neill.
Access to advice for small businesses is an important issue that should be considered as part of the government’s consultation on reforms to the small business restructuring pathway and the simplified liquidation pathway, Senator Deborah O’Neill has said.
The chair of the Parliamentary Joint Committee on Corporate and Financial Services said that small businesses needed more assistance in considering what responses to make before they reach the point of needing to deconstruct their business.
The Parliamentary Joint Committee on Corporate Financial Services handed down its report for its inquiry into corporate insolvency in July, which included recommendations on the small business restructuring pathway.
One of the recommendations made in the report was for the government to consider and consult on the potential reforms to the small business restructuring pathway and the simplified liquidation pathway as soon as practicable.
In a recent CPA Australia podcast, Ms O’Neill said the committee identified some inherent disadvantages within the current regime that needed to be addressed.
“The small business restructuring pathway needs to be a pathway, not just an incremental movement towards that pathway where things start to really get serious about deconstructing the business. Before that people need some assistance, and I think that we need that to be part of the consideration of a suite that covers the whole range of responses that's needed,” said Ms O’Neill speaking in a recent With Interest podcast.
“Despite the work of ASBFEO, I think a lot of people are very, very, very separate from these business opportunities that the government funds and provides, but not everybody knows about them.”
“We had some discussions about the particular kinds of literacies that business owners have. It's great to have a kind of literacy that allows you to stand up a business and make money [but] not everybody has the financial literacy that an accountant would have to interact with the system. And not everybody has an accountant.”
Ms O’Neill said that one of the challenges in improving the current framework will be making the legal avenues and the practical responses to challenges available to everybody regardless of their literacy level.
Speaking in the same podcast, CPA Australia head of media and external engagement Dr Jane Rennie said financially distressed businesses often seek advice too late in the process.
“We know those who do are more likely to survive or achieve an orderly transition,” said Dr Rennie.
Ms O’Neill said that the recommendations made in the report were currently under review by the relevant ministers.
“Six months would be the normal time in which a government might consider such a report and then come back and report back to parliament,” said Ms O’Neill.
“I’m hopeful that we'll get a response in that time period with an indication from the government about its plans.”
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