Research released by credit reporting agency Dun & Bradstreet (D&B) sees one in nine businesses in the ‘high risk’ category of financial distress, according to a report by The Weekend Australian. This puts more than 100,000 small to medium sized businesses in the path of failure.
SMEs contribute to about a third of gross domestic product and employ about 5.5 million Australians, hence the health of the small businesses sector will have implications for the wider economy.
The D&B research shows the finance, insurance and real estate sectors have the highest number of businesses in financial distress, with manufacturing on the rise, recording a 15 percent rise on last year. Attaining credit to cover cash flow problems has been an obstacle.
“With the economy set to weaken in 2009, cash flow and debt refinancing problems are becoming a significant burden for Australian firms,” said Christine Christian, CEO of D&B.