Insolvency practitioners are warning that small and medium-sized companies are yet to feel the full effects of the global financial crisis.
RSM Bird Cameron’s partner of turnaround and insolvency Peter Marsden, said that the number of SME insolvency cases in the firm’s Sydney practice has doubled in the past couple of 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,” he said.
According to Marsden, SMEs are highly reliant on banks or personal finances to raise capital for investments and as a result are hit hard when times get tough.
“The Australian economy hangs in balance and all businesses…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,” he said.