Inaccurate budget estimates and a series of failed income-raising ventures are behind the closure of disability service Radius, its chairman has said. 

Russell Robertson said it was no longer possible for the organisation to offer its care and supported employment programs while continuing to pay staff members.  

Radius entered into voluntary administration on Monday.

An assessment of budget forecasts, conducted by newly appointed chief executive officer Alyson Miller, found Radius could fall as short as $500,000 from what it needed to operate over the next year.

“There was no willful behaviour, no financial misappropriation, no dishonest activity,” he said.

“There might've been, at times, estimates that were, in hindsight, too optimistic.” 

He said the budget was the responsibility of the CEO and the leadership team. 

In the past five years, several revenue-raising activities had failed to produce enough cash to keep the business viable, Mr Robertson said. 

A mail service, clothes sorting venture, electronic waste collection and a paper-making enterprise had not raised a sustainable income. 

While he hoped Morley’s Emporium cafe and retail space would change the organisation’s fortunes, Mr Robertson said that reality had not eventuated. 

“It's a great tragedy that business model has stopped and I would dearly love Bendigo to be able to see that business model continue in some other form.”

About 40 employees were made redundant on Monday. Others remain at work until administrators decide on Radius’ future. 

Radius has about 130 supported employees, 100 day service clients and 80 general employees.

Mr Robertson said ongoing care was still available for clients with the most complex needs throughout the period of voluntary administration, and work placements for supported employees would also continue.

It was for the administrators, Victorian health and human services department and federal social services department to negotiate how long these arrangements remained in place. 

Former Radius CEO Cath McDonald, whose three-year contract was not renewed earlier this year, said she was "shattered" by its closure but explained financial stress was nothing new for the business.

"It (voluntary administration) was something that was already on the mind," she said.

She said a 2013 High Court judgment, which found workers with an intellectual disability were entitled to award wages, increased Radius' expenses by as much as $1 million per year. 

“This is why, throughout the country, the small disability organisations will struggle," Ms McDonald said. 

She also described the organisation's move into Mitchell Street's Morley Johnson building, and the establishment of its Morley's Emporium social enterprise, as "poorly timed".

"It was a valiant attempt, but it was too late," she said. 

She had previously called the move one of Victoria's most ambitious social enterprise attempts.

The Bendigo Advertiser has obtained correspondence between Radius management and its employees during the past year in which staff were told cash flow was “very tight”. 

“In order to monitor and ensure we have enough cash to pay wages we need to monitor our spending,” an email, sent last November, explained. 

Another letter, this time delivering news of Ms McDonald’s departure, said: “The board is focused on maintaining the financial stability of the organisation and delivering its core promise of creating outcomes for people with disabilities so their lives are enriched and fulfilled.”  

In April this year, supported employees were also informed budgetary constraints meant they would no longer be offered more than 12 hours’ work each week.