‘Trouble brewing’ as businesses head towards economic cliff
TROUBLE is brewing for thousands of Australian small businesses with new data revealing the number of overdue payments have skyrocketed.
Figures from financial agency CreditorWatch reveal company payments in June were overdue by an average of 49 days across industries, 342 per cent higher than the same time last year.
The haunting figures suggest that while the number of company collapses have fallen - by 50 per cent compared to last June - the nation is heading towards a cliff when government support is wound back in late September.
CreditorWatch CEO Patrick Coghlan said businesses were still struggling to make ends meet.
"While at first glance, a decrease in business administrations, court actions and defaults seems to indicate a rebounding economy, however when we take a deeper look, it's clear that trouble is brewing and that businesses are struggling with significant cash flow issues," he said.
"We're likely to see a significant jump in the number of businesses coming out of hibernation and entering into administration in the coming months."
Overdue payments increased 900 per cent in the arts sector, 780 per cent in IT and 367 per cent in retail.
Only mining recorded no increase.
Mr Coghlan said the government's stimulus programs had protected businesses and kept many "above water" during COVID-19.
"Come September however, support packages will be lifted and we'll find that a substantial number of zombie businesses have been kept artificially afloat," he said.
Construction increased to 53 days overdue in June 2020 - up 253 per cent on last year
Arts and recreation services increased to 60 days overdue in June 2020 - up 900 per cent
Retail increased to 42 days overdue in June 2020 - up 367 per cent
Rental, hiring and real estate services increased to 70 days in June 2020 - up 678 per cent
Electricity, gas, water and waste services increased to 37 days overdue in June 2020 - up 311 per cent
Healthcare and social assistance increased to 52 days overdue - up 643 per cent
Originally published as 'Trouble brewing' as businesses head towards economic cliff