Insolvency practitioners are offering a stark warning to Australian business: get your affairs in order, bad times are ahead.

Key points: Insolvency practitioners say they are receiving more enquiries and are expecting a busy 2020

Insolvency practitioners say they are receiving more enquiries and are expecting a busy 2020 That is a bad sign for the economy, with retailers in particular facing the possibility of business failure

That is a bad sign for the economy, with retailers in particular facing the possibility of business failure The small business ombudsman is currently holding an inquiry into the practices of liquidators

With their role in turning around failing businesses, or winding them up, the corporate undertakers are an indicator of the broader economy, so it's telling that they're hiring, expanding and preparing for a difficult 2020.

"We're starting to see some interesting signs of distress arising amongst both firms and individuals," said John Winter, chief executive of the industry's peak body, ARITA (the Australian Restructuring Insolvency and Turnaround Association).

"Insolvency practitioners, who are bit of the 'canary in the coal mine' for the economy, are seeing increasing levels of inquiry from people coming in and saying that they are worried about their business or they're worried about their personal finances … and what their insolvency options might be."

Melbourne practitioner Robyn Erskine, of Brooke Bird, agreed with the grim assessment.

"Business is good," she said. "It's always challenging for insolvency practitioners because no-one particularly likes to come in and seek our services."

Brooke Bird's staff focus on turning around, or winding up, small- to medium-sized businesses.

They're busy and expect to have more staff on by this time next year.

"It's really tough times out there for small business, and it has been for a number of years," Mrs Erskine said.

"But it's across the board and, unlike in other periods where we have seen a particular sector [struggling], it's every sector."

Retailers at the epicentre of pain

While there is a general malaise, the pain is being felt in one of the most visible areas of the economy — retail. Wage stagnation and low consumer confidence have snapped wallets shut.

"Certainly we know that retail is really struggling and confidence is down generally," Mrs Erskine said.

"People are just not spending, and not spending maybe because they just don't have the money.

"It's not necessarily a 'confidence' thing, some people just don't have money to spend, that's what we're seeing."

New research backs up the vibe. Half of the retailers surveyed by consulting firm Deloitte said 2019 sales were flat or negative.

Retailers expect that to continue, with the worst sales conditions for six years — a fifth expect no growth and just a third, the highest proportion in the survey's history, tip sales to be up by a weak 2 per cent.

ARITA covers more than 2,000 practitioners.

The industry is counter-cyclical, meaning its fortunes are generally the opposite of the broader economy. As a result of a long run of good times, liquidator numbers are at almost record lows.

"But what's been really interesting though over the last couple of months, we've seen a significant upsurge in recruitment for insolvency professionals," Mr Winter said.

"So the market is already starting to gear up in expectation of a downturn."

Mrs Erskine is worried about the coming year, even though it promises to be a time of growth for her firm and industry.

Robyn Erskine, a partner at insolvency firm Brooke Bird, says they are planning to hire more staff. ( ABC News: Daniel Ziffer )

Previous downturns, like the recession of the 1990s and the global financial crisis of a decade ago, had an impact across society, but largely concerned corporate debt. Mrs Erskine is worried economic change means this slowdown will hit families even harder.

"The 1990s, the GFC, that certainly hit sectors in our economy and certainly some families were very much affected," she said.

"But now it's all families. Everybody has an enormous debt load. If they lose their job, if their business isn't as profitable as what it should be, then it certainly comes back to the amount of money that's available to feed and clothe the family."

The insolvency practitioner is urging businesses to tackle problems, rather than ignoring them.

"The earlier the better," she said.

"It sounds a bit strange, but the fact is that if we can see people early we can perhaps put some remediation work together to turn something around.

"But if they leave things too late, it's very difficult to actually do anything other than to wind them up."

Review poses questions

The industry isn't without its own problems. Australian small business ombudsman Kate Carnell is holding an inquiry into the experiences of the more than 8,000 companies that enter administration each year.

"We're looking at how we make this system better for small businesses and farmers," she said, launching the inquiry in October.

"Improve the transparency, and hopefully have a system that encourages more turnaround than liquidation.

"The banking royal commission didn't look at insolvency practices, even though this is one of those issues that is raised time and time again by small businesses, farmers and others. So we think this was a big gap."

Ms Carnell has concerns about the low rate of business owners that are able to restructure, and whether some liquidators have a conflict of interest.

The peak body — which hasn't been invited to make a submission — is concerned it's a hatchet job.

"We've had significant numbers of reviews into this profession for many years," Mr Winter responded.

"There's been significant law reform and we have two regulators that oversee this profession.

"If that's not enough of a review, frankly we don't know what is."

Mrs Erskine understands the dim view the field is held in, but wants people to know they're working to fix tough situations.

"We're not all evil people out there trying to, you know, steal the food off people's plates and sell houses," she said.

"We're really about rehabilitation and really about trying to help people move forward from a very difficult period in their lives."