An insolvency expert has warned some businesses will not survive in the absence of government COVID-19 subsidies.
An insolvency expert has warned some businesses will not survive in the absence of government COVID-19 subsidies.

Warning to Coast businesses as insolvencies spike ‘a given’

A strangely quiet period for the region's insolvency accountants should serve as a warning for Sunshine Coast businesses.

With government lifelines due to expire or be scaled back in coming months, Worrells Solvency and Forensic Accountants partner Paul Nogueira said businesses must look at cashflow and restructuring now.

Relaxed insolvency laws which allowed businesses to trade without making a profit for six months are due to expire on September 25.

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JobKeeper 2.0 will also be implemented from September 28, offering eligible businesses reduced payments of $1200 for full-time workers and $750 for part-time or casuals.

It's expected under the new scheme fewer businesses will be eligible.

Mr Nogueira said more businesses going bust once government lifelines expire was a given.

"The month of July has been busier than expected, but prior to that it was exceptionally quiet," he said.

"August and September are going to be really telling in relation to whether we see an increase of insolvencies or if businesses will make it past JobKeeper if they don't qualify for it.

"Insolvencies will increase, it's a given, it's just whether that will come this side of Christmas or next year and that will depend on the government's decisions on these lifelines."

Mr Nogueira said businesses should consider how to manage cashflow without requiring government support.

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"Businesses really need to assess their current model and do their cashflow assessments into the future and make structural changes to bring them back into a profitable situation and if they can do that, hopefully they can survive," he said.

"They need to do these assessments with the view that government lifelines will end."

Mr Nogueira said business owners who fear they cannot turn a profit should seek financial advice sooner rather than later to reduce the impact on potential creditors.

The latest Suncorp Pulse survey, released Monday, revealed most Queensland businesses fear they'll go bust within the next 12 months.

The survey was conducted by the Chamber of Commerce and Industry Queensland and found one in five owners were running "zombie" businesses that would collapse within three months of government support measures being removed.

The survey of almost 1200 businesses throughout Queensland found a further one in three were convinced trading conditions were so poor that they were at risk of shutting their doors permanently within 12 months as their cash reserves dwindled.

As of July, 14,191 Sunshine Coast businesses were receiving the JobKeeper subsidy.

"I envisage this will be long-lasting and there will be a lot of insolvencies to come out of what we've gone through with covid," Mr Nogueira said.

"Whether that's a short and sharp increase or something more long and drawn out, it's still unclear."