Warning of more insolvencies to come as January breaks record for collapses, new figures show

The high number of insolvencies among SMEs is set to continue in 2013, according to analysis of the latest Australian Securities and Investments Commission figures, which have recorded the highest number of insolvencies during any January on record.

The results for January show 628 companies collapsed at the start of this year, the highest monthly figure on record for the month, up 21.2% from the same time last year.

Despite this increase, January insolvencies were down 14% compared to those in December 2012.

Total company collapses for the first seven months of the financial year have come to 6,053 – the second highest figure on record for the period, down only 0.2% from last year.

Taylor Woodings partner Andrew Schwarz told SmartCompany while the statistics for January were down from December, January has always seen a dip.

“The statistics for January are obviously down on previous months, but it’s traditionally lower due to courts being closed and the holiday period,” he said.

“These figures are certainly higher than previous Januarys and this is consistent with the current trend,” he said.

Schwarz says consistent economic influences, such as the value of the Australian dollar, have continued to have a negative impact on companies, causing a higher than normal rate of collapses.

“The high Australian dollar, until recently low consumer confidence, low business investment and slowing down in the mining boom, have ultimately affected the viability of companies,” he said.

Company collapses in Western Australia doubled in January in contrast to this time last year, with the number increasing from 29 to 58.

Schwarz says Western Australia is juggling a “two speed economy”.

“The mining sector is doing well, but this has placed pressures on other industries. Recently there has certainly been a fall in commodity prices and companies have also put projects on hold,” he says.

In New South Wales the number of collapses decreased from 194 to 189, down 2.6%

Schwarz says the figures don’t detail specific industries, but from his experience, the retail, tourism, construction and manufacturing industries will continue to see many company collapses.