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If you're operating in the non-profit or NDIS sector, you're likely feeling the strain.
The disability services sector is facing unprecedented financial strain. ASIC data shows a 200% increase in insolvency appointments since 2023, with NDIS-funded organisations representing the majority of cases.
From rising costs and stricter compliance requirements to capped pricing and governance challenges, many providers are finding their financial runway is rapidly shortening. For boards, executives and directors, the risks of delay are significant.
If you're an NDIS provider in distress and looking for answers, this report is your opportunity. Download it now >>
What you'll find in this report
Why insolvency rates among NDIS providers have surged since 2023.
The key causes of financial distress – from wage pressures to capped pricing.
Practical options for distressed organisations, including turnaround strategies, mergers, restructuring regimes, and voluntary administration.
How to protect participants and ensure continuity of care during financial change.
The role of Safe Harbour provisions in protecting directors from personal liability.
Why is our healthcare and social sector showing signs of financial distress?
Calls from non-profits and NDIS providers have changed from wanting to improve financial performance to seeking a way out of a financial crisis. The primary causes are:
- Higher costs
- Heavier compliance
- Unrealistic funding model
- Flawed operations
Inside the report, you'll find a detailed breakdown of these contributing factors. Read it now >>
Jonathon Colbran
Even if it’s hard to face, holding onto false hope can lead to a much harder fall. Having worked with many businesses in a similar predicament, we can say without hesitation that the faster you act, the more options are available to you.
How much runway do you have?
How much runway do you have?
In a distressed business, the ability to turn things around largely depends on how much runway you have. This is the amount of time left before options run out and the situation becomes unsalvageable.
- Even if it’s hard to face, holding onto false hope can lead to a much harder fall. Having worked with many businesses in a similar predicament, we can say without hesitation that the faster you act, the more options are available to you.
- The variety of options depends on your business’s unique circumstances. It may be that your board has only just noticed revenue is trending down, and is seeking early advice to reverse it..
- When your business isn’t making enough money to stay solvent, you need a plan. Not just a plan to pay off some debt and hopefully land a few more clients a holistic plan that takes a serious look at your operating model and seeks to restructure what’s not working.
If a business can raise enough funds to pay most or all of its debts, the focus will typically remain on the turnaround plan, with a clear strategy for how those new funds will be used.
For your NDIS business to be eligible for the SBR, you must:
- Have liabilities less than $1m.
- Have all employee entitlements and tax lodgements up to date.
- Not have directors who have used the SBR process or undertaken a simplified liquidation in the past seven years.
- You also need to be working with a small business restructuring practitioner to develop and implement a restructuring plan.
For non-profits under pressure, merging with another organisation can be an effective way to stay afloat and continue delivering vital services to the community.
They are not a fast solution though, so if you wait too long this won’t always be a viable option.
Finding the right fit, negotiating terms, and finalising the legalities all take time.
- Even if the only remaining option to save the business is to enter voluntary administration, it can still present an opportunity. Your leadership team may well be exhausted, with the prolonged stress weighing heavily on everyone.
- As a final option - either because you’re out of options, or there’s no desire to save the business, or the organisation has reached the end of its useful life and has served its purpose - your leadership team may opt for an orderly wind-up.
- While this would be considered the end of the road, it can provide a great sense of relief and a fresh start for all involved.
Kirsty McGovern-Hooley
In addition to low margins and risks of inefficiency, one of the biggest contributing factors to flawed business models in non-profits is a lack of quality business capability. While passionate and highly skilled in their line of work, most founders of an NDIS service will not come from a background in finance or operations.
Campbell Hudson
Whatever the outcome, the relatively small investment in time and money that you make right now could be the key to saving your non-profit or NDIS service, and at least protecting you from more financial risk in the future.
How we can help.
Between RSM and Dentons, NDIS providers and non-profits have all the support they need to restructure and turn their business around, or formally wind it up.
As a first step, RSM’s tailored Options Plan presents:
- a clear picture of your organisation’s current financial position
- the Plan A and Plan B options available to you right now
- how long each option is likely to remain viable
Remember, the longer you wait to get advice and enact it, the
fewer options will be available to you.
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