NDIS Insolvencies: Good Intentions, Poor Execution – A Growing Crisis
The National Disability Insurance Scheme (NDIS) has transformed the delivery of disability support services in Australia. At its best, it enables participant choice, and empowers skilled occupational therapists, support coordinators and allied health professionals to build impactful businesses. However, for all its promise, we are seeing an increasing number of NDIS providers entering financial distress and insolvency. In many of these cases, the issue is not the service quality or the frontline staff – it’s a failure in management, systems, and governance.
As restructuring professionals, we have been involved in a range of appointments involving NDIS providers – from sole practitioners to multi-entity groups with 300+ staff. While each has its nuances, several themes emerge repeatedly. These issues often stem from rapid growth unsupported by commercial discipline, and a lack of understanding of the operational complexities involved in running a NDIS-registered organisation.
1. Strong Clinicians, Weak Business Infrastructure
Many NDIS businesses are founded by passionate and skilled clinicians – occupational therapists, speech pathologists, social workers – who are excellent at care delivery but lack formal training in business management. As their client base grows, so too do administrative obligations, staffing needs, and financial complexities. Without proper support or commercial acumen, the operation quickly becomes unmanageable.
We regularly see NDIS providers without a basic finance function – no dedicated bookkeeper, no CFO oversight, and poor visibility over cash flow. Financial reports are out of date or not accurate. Cost centres are not tracked. Budgets are non-existent. In some cases, invoices are raised without reconciliations, leading to underbilling or, more dangerously, duplicate invoicing to the NDIA – which can prompt audits, clawbacks, or investigation.
2. Rapid Expansion Without Controls
The NDIS space has attracted rapid growth – and with it, the temptation to scale aggressively. Providers open new hubs, hire dozens of staff, and expand service lines, often without foundational systems in place. In these scenarios, growth masks the cracks – until cash flow pressure exposes them.
Key red flags in these cases include:
- Payroll exceeding 70-80% of revenue, with no correlation to client demand or participants approved plans.
- Providing services outside of scope of participant plans. This includes not advising NDIS of change in participant circumstances.
- Failure to revise and update plans, which are being rolled over on prior terms.
- Poor relationships with planning / support co-ordinators.
- Participants being assigned multiple workers for tasks when their plan requires only one.
- Support services not turning up for appointments or delivering services with incomplete or missing case notes and time records – which then cannot be invoiced appropriately or supported.
This kind of mismanagement leads to service leakage, revenue loss, and eventually, an inability to meet payroll or tax obligations.
3. Failure to Monitor and Align with Participant Plans
NDIS payments are tied to approved participant plans, which must be reviewed and updated regularly. Yet we consistently see providers continuing to deliver services after funding under a plan has expired or been exhausted. In some cases, this is due to goodwill – a therapist not wanting to abandon a client – but the business consequence is severe. Services are rendered with no revenue to match.
It is essential that providers track participant plan balances in real-time and coordinate service delivery accordingly. Without this, it is only a matter of time before they find themselves funding services that will never be paid.
4. Award Compliance and Rising Employment Costs
NDIS providers are subject to the Social, Community, Home Care and Disability Services (SCHADS)Award, which has undergone several changes in recent years, particularly around minimum shift lengths and broken shifts. We see frequent non-compliance here – whether accidental or deliberate – resulting in underpayments, staff disputes, or exposure to Fair Work claims.
Compounding this, wages have increased significantly, yet many providers have not revisited their pricing model. Profit margins – already thin – are further eroded. Where management lacks the data or confidence to review pricing or renegotiate terms, viability becomes increasingly tenuous.
5. Insurance Gaps and Professional Risk Exposure
Another common oversight is insurance. NDIS providers are subject to a range of risks – professional liability, malpractice, abuse allegations, property risk – yet many carry insufficient insurance cover. Claims arise for injury or negligence, only to discoverthat the business lacked a current or appropriate insurance coverage.
Directors must ensure that policies are up to date, adequate in scope, and reflect the nature of the services provided, especially when dealing with vulnerable participants.
6. Technology and Record-Keeping Failures
Documentation in the NDIS space is critical – not just for billing, but also for compliance, audit risk, and duty of care. However, many providers are operating without a proper client management system (CMS) or rostering platform. Therapists might be recording notes in spreadsheets, or worse, on paper.
Without consistent and interconnected systems, businesses cannot track service delivery, confirm attendance, or substantiate invoices. They are also unable to identify trends – such as frequent no-shows, underutilised staff, or over-servicing – until it’s too late.
7. Signs of Trouble – and When to Act
The warning signs are consistent:
- Invoices delayed or rejected by the NDIA or worse still, receive notice that a manual review will be undertaken.
- Growing tax, including payroll tax or superannuation arrears.
- Increasing complaints from staff or participants.
- Uncertainty about cash position or profitability.
- Inability to pay wages or creditors on time.
Insolvency is rarely sudden. More often, it’s a slow bleed masked by short-term fixes – funding from directors, deferred liabilities, or silent hope that the NDIA will catch up with payments. But without a clear strategy, providers eventually hit a wall.
8. What Can Be Done?
NDIS providers facing distress need early, qualified advice. This may include:
- Conducting a short-form financial and operational review.
- Review participant plans that are coming up for renewal and plans reaching their funding limit.
- Implementing back-office systems for billing, HR, and compliance.
- Redesigning rostering and service delivery to match funded hours.
- Reviewing insurance and award compliance.
- Engaging an external bookkeeper or part-time CFO to regain financial control.
Where the issues are systemic or debts are mounting, restructuring options – such as a voluntary administration – may be appropriate to preserve the business and protect participant services.
Final Thoughts
The NDIS has created tremendous opportunities – but it is not a system that tolerates poor governance. Providers are operating in a highly regulated, high-responsibility environment, and passion alone is not enough. Sustainable NDIS businesses must be built on sound financial management, appropriate systems, and disciplined operations.
