Performing due diligence is more important than ever
Court actions increased in FY2019 across all states, with the exception of WA, by 18% volume and 13% dollar amount.
Victoria took the lead with the highest amount of court actions, followed by New South Wales. Victoria had the highest dollar amounts in July 2017 and April 2019. Western Australia had the least amount with a consistent decrease. Nationwide, there was a significant peak in court actions in July 2017 and again, in May 2019.
We saw the highest year on year increase with South Australia which increased in court action volume by 28% and court action dollar amount by 55%.
Like the usual Small Business Risk Review revealed, insolvencies and bankruptcies across Australia decreased. Insolvencies decreased by 25% and bankruptcies fell by 13%. The last peak of bankruptcies occurred in July 2018 and they have fallen since then. With the worrying trend of court action increase, time will only tell when we see the next round of insolvencies and bankruptcies on the rise.
As mentioned in the quarterly Small Business Risk Review Q2 2019, there could be various reasons for the increase such as the rise of cost of living, increase in late payments and payment times, and industry trends such as construction being the riskiest business across the nation this past financial year.
Time will only tell where these statistics lead, but it is vital to stay on top of due diligence and monitoring customers. The data can only empower small businesses to have a plan in place, watch their cash flow and know who they are dealing with.
More articles like this: Small Business Risk Review Quarter 2 2019: What’s Going On With NSW, SA and VIC?