More Australian businesses are struggling to pay their bills since JobKeeper ended, CreditorWatch has found.
The digital credit reporting agency's latest Business Risk Review is the first it has conducted since the end of JobKeeper. It found that, while business activity looks to be generally healthy, businesses are taking longer to pay their bills.
It also found the number of defaults is back to pre-pandemic levels, though some industries are still struggling. But CreditorWatch believes a strong pipeline of credit enquiries points to an economic recovery.
Bills are multiplying after JobKeeper
One trend highlighted in CreditorWatch's April Business Risk Review was the increase in time businesses took to pay their bills since JobKeeper ended.
CreditWatch said this held true across 17 of the 19 industries surveyed. The industries most affected were healthcare, construction, administration, and social assistance.
CreditorWatch CEO Patrick Coghlan commented on the increase in payment delays, saying:
Twice as many industries reported a deterioration in payment times versus last month. This is to be expected following the withdrawal of JobKeeper – the Federal Government's main economic stimulus measure.
But we won't really be able to get a true read on economic conditions until the June and September quarters, when businesses will have had time to stand on their own feet for a period without government support.
While defaults were found to be lower than the same time last year, they've increased since January 2021. Currently, the businesses most likely to default are those in industries such as accommodation, food services, postal, and public administration.
CreditorWatch's chief economist Harley Dale said yesterday:
The sting is defaults rose by 18 per cent in the three months to April 2021 compared to the three months to January 2021. We are certainly seeing mixed results for defaults and will have a watchful eye on these figures for the June 2021 quarter. These results will be far more telling in terms of how businesses are really performing…
It's expected the Federal Government will announce targeted stimulus measures in the federal budget to assist sectors that have been severely affected by pandemic. This will also flow through to future payments' data.
Good news
While some of the data within the latest Business Risk Review looks bleak, it also houses plenty of positive news.
CreditorWatch said the rate of external administrations – which incorporates administration, receivership and liquidation – was falling. Over the three months prior to April 2021, the number of external administrations dropped 34% compared to the same period of 2020. CreditorWatch said that number had been falling for 14 consecutive months now.
The agency also reported a continuing pipeline of credit enquiries. It says this indicates a healthy level of business activities following the pandemic – another sign Australia's economy is recovering from both the pandemic and the end of JobKeeper. CreditorWatch performed 39% more credit enquiries last month than it did in April 2020.
