Small businesses must understand the root causes of their cash flow problems to curtail insolvency risks, experts say. RSM Australia’s national head of restructuring and recovery, Jerome Mohen, has told Accountants Daily that RSM modelling indicates rising insolvencies in the coming financial year.
This is particularly evident in industries where companies cannot pass on rising costs to the consumer, with business challenges not “sector agnostic”, Mohen said.
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RSM Canberra partner Adam Cormack said the causes could include temporary liquidity pressure, poor profitability, a cash collection cycle that is taking too long, exceedingly high interest rates due to…