REVEALED: Businesses at risk of collapse

ALARMING financial figures have revealed the city's building and construction sector is at risk of failure despite large scale projects boosting the region's economy.

While the majority of Toowoomba's businesses outlook looked poised for growth, 82 were at risk of financial collapse.

Sixteen of those are construction companies, according to SV Partners Commercial Risk Outlook report.

The report found of the 2248 registered operating businesses in Toowoomba, about 900 were on track for positive financial growth.

RELATED: Toowoomba's soaring bankruptcy rate prompts warning

"Toowoomba is quite positive about the future growth of the area, particularly with a number of key infrastructure projects on the horizon," SV Partners Queensland director Anne Meagher said.

"However, the smaller businesses are the ones who are hurting, particularly in the construction market, and the reasons continue to include under-quoting to secure tenders, inadequate costing of projects prior to beginning works and inadequate financial reporting.

"So while growth is expected in the region, we're seeing some casualties in the smaller-sized construction companies."

Australian Financial Security Authority figures reveal 18 people declared a business-related insolvency in Toowoomba from April to June this year, up by three for the preceding March quarter.

Non-business related insolvencies sat at 74 for Toowoomba for the June quarter, up 14 from the March quarter total of 50 declarations.

Are you surprised the city’s construction sector could be at risk of failure?

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In the broader Darling Downs region of Maranoa, AFSA figures revealed five business-related insolvencies were declared in the June quarter, and 20 non-business related declarations for the same period.

Ms Meagher said it was critical businesses in all sectors had solid financial planning advice.

She said construction industry failures were predominantly caused by insufficient capital reserves, high cash use and poor financial management.

Financial and insurance services operators were the strongest performing industry with 163 of the registered 252 businesses deemed at low risk of failing.

That industry was followed by the professional, scientific and technical services in Toowoomba.

Topics:  australian financial security authority bankruptcy business darling downs finance toowoomba

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