Payment times have tightened

The February 2023 CreditorWatch Business Risk Index (BRI) shows that business conditions, particularly around payment times have tightened due to high inflation and interest rates, in combination with falling demand.

An interesting finding in the data is that regions whose occupants fall into a lower median age category have a tendency for higher default rates (current and projected) than regions with higher median ages.

CreditorWatch CEO Patrick Coghlan says the February Business Risk Index results show that Australian businesses are under increasing stress.

“From inflation to interest rates, supply chain problems, labour shortages and falling consumer demand, Australian businesses are doing it tougher now than they have since the GFC back in 2009,” he says.

“The businesses that have proper credit risk management processes in place and are monitoring the health of their ledgers will weather this storm much better than those that don’t.”

CreditorWatch Chief Economist, Anneke Thompson, says we are now entering a very difficult stage for businesses to operate in.

“The economy is in the early stages of its downturn,” she says “Prices are still rising, although we appear to have the worst of the price rises behind us, interest rates are likely to need to increase further, and consumer demand is slowing, and will continue to slow.

“The immediate impact is being felt by smaller businesses that are reliant on discretionary spending, before the impact flows through to the rest of the economy, including those businesses not directly exposed to consumers.”