The number of Australian businesses entering external administration is on track to hit 10,000 this financial year, the worst level of business failures in more than a decade, the corporate regulator says.
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One local business owner, who is owed close to $1 million from a failed builder, described the surge in company collapses as a "disaster".
Data released by the Australian Securities and Investments Commission shows 7742 companies across the country entered external administration for the nine months to March 31.
It marks a 36.2 per cent increase on the same nine-month period last year.
ASIC expects the number of external administrations will exceed 10,000 by the end of this financial year, a level not seen since 2013.
Construction businesses made up nearly a third of the external administrations (2142) so far this financial year, followed by accommodation and food services industries, which made up 15 per cent (1174).
However, the regulator noted external administrations only made up about 0.3 per cent of the number of registered companies, a lower rate of failure compared to 2012-13 when it was about 0.5 per cent.
In that time, the number of registered companies has grown from just more than 2 million to 3.3 million, ASIC says.
Canberra businesses report 'gloomy' outlook
In the nine months to March, 124 ACT companies entered administration, ASIC data shows.
The figure has already exceeded last financial year's total, when external administrators were called in for 121 businesses.
The statistics were unsurprising to Canberra Business Chamber CEO Greg Harford, who said ACT businesses were reporting a "pretty gloomy" outlook.
"The big issue is the cost of doing business is going up at the same time customer demand for services is down," he said.
Long-running builders Project Coordination and Rork Projects were among four Canberra construction businesses that went bust within the space of a month earlier this year.
The surge in external administrations has had far-reaching impacts on other Canberra businesses.
Chris Nowaczyk said the collapse of Rork Projects, a national builder with operations in the ACT, was a "massive hit" to his joinery business The Works Fitouts.
Mr Nowaczyk was working on five of the builder's projects when it entered external administration in March.
Left out of pocket nearly $1 million, Mr Nowaczyk said he had been using his own savings to keep his business going.
"Worst case scenario, I might have to go into administration myself," he said.
"I can't just make money out of nowhere.
"I've got employees, there's six of us and I need to keep those guys busy as well."
Canberra food and beverage businesses have also felt the pressure as consumers tighten the belt, Mr Harford said.
"At the same time, we've still got real challenges around - particularly in the CBD - people who are working from home and therefore not in the office and not going out and buying their lunch and so forth," he said.
Botswana Butchery was the latest high-profile restaurant to enter external administration, following Braddon's The Italian Place in August 2023.
Mr Harford said interest rate cuts would make the biggest difference to business confidence and performance this year.
"Interest rates are one of the key things that's driving the cost of doing business," he said.
"Obviously, it's costing more for businesses to service their debt at the moment and it's also keeping a lid on consumer spending as well."
He said it was concerning that economists were predicting the Reserve Bank was unlikely to lower the cash rate until the end of the year.
"I think that's one lever that we would really like to see pulled reasonably soon," he said.
Mr Nowaczyk wants to see more government support for businesses who are left out of pocket when other companies collapse.
He said project trust accounts, like those used across construction jobs in Queensland, could give subcontractors a better chance of getting paid.
"When you've got floods or fire in Australia, there's always funds from state government or federal government ... which actually help people to get through this," Mr Nowaczyk said.
"Well this is our disaster."