Latest Accounting News
Hot Issues
Businesses ghosting the ATO targeted in debt collection blitz
Claiming the tax-free threshold: getting it right
Aussies tired of ‘dodgy tax criminals’, warns ATO
Protect your small business by following these essential steps.
Super guarantee a focus area for ATO business debt collection
Controversial ‘Airbnb tax’ set to become law
Withholding for foreign residents: an ATO focus area
1 in 3 crypto owners confused about tax, study reveals
20 Years of Silicon Valley Trends: 2004 - 2024 Insights
ATO reveals common rental property errors from data-matching program
New SMSF expense rules: what you need to know
Government releases details on luxury car tax changes
Treasurer unveils design details for payday super
6 steps to create a mentally healthy and vibrant workplace
What are the government’s intentions with negative gearing?
Small business decries ‘unfair’ payday super changes
The Leaders Who Refused to Step Down 1939 - 2024
Time for a superannuation check-up?
Scam alert: fake ASIC branding on social media
Millions of landlords the target of expanded ATO crackdown
Government urged to exempt small firms from TPB reforms
ATO warns businesses on looming TPAR deadline
How to read a Balance Sheet
Unregistered or Registered Trade Marks?
Most Popular Operating Systems 1999 - 2022
7 Steps to Dealing With a Legal Issue or Dispute
How Do I Resolve a Dispute With My Supplier?
Changes to Casual Employment in August 2024
Temporary FBT break lifts plug-in hybrid sales 130%
The five reasons why the $A is likely to rise further - if recession is avoided
June quarter inflation data reduces risk of rate risk
Articles archive
Quarter 3 July - September 2024
Quarter 2 April - June 2024
Quarter 1 January - March 2024
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 2 April - June 2007
Quarter 2 April - June 2006
Quarter 4 of 2023
Articles
Record low invoice values ‘reveal inflation sting’
A 2023 Advent Calendar for our clients
Average refund plummets by $580, total payout down $5.4bn
FBT – Christmas Parties and Taxi Fare/Rideshare
Annual wage growth surges to 14-year high of 4%
Is My Organisation Exempt From the Spam Act?
Employee Christmas Parties and Gifts – Any FBT?
Most Expensive Wars In History
Australian Taxation Office (ATO) motor vehicle data matching program extended
Directors on the hook for cyber security, ASIC warns
I am making a profit but where does all the cash go?
Using the cents per kilometre method for claiming car expenses
Scams by numbers - 2022–23 scam data is now available
Completing the Sale of a Business
Business owners are seeking exits without a plan, survey finds
Most powerful countries throughout time.
Super tax concession changes: consultation
ATO interest charges soar to highest level since GFC
TOP 5 CHALLENGES FOR FAMILY BUSINESSES
ATO linking system takes giant stride into business
Cyber threats facing small to medium-sized businesses (SMBs)
Most powerful LEADERS of All Time
How Do I Respond to an Allegation of Trade Mark Infringement?
$20k instant asset write-off to get 1-year extension
Record low invoice values ‘reveal inflation sting’

The latest CreditorWatch data shows small businesses are being hardest hit by rising prices and interest rates.

 



.


The average value of invoices has dropped by a third in the past 12 months and external administrations are up 81 per cent, according to the latest CreditorWatch Business Risk Index.


Its October data revealed the lowest average invoice value since the credit bureau began tracking the figure in January 2015, and said it signalled a drop in forward orders which could cause a ripple effect down the supply chain.


 

It said B2B trade payment defaults saw a slight improvement from September but are now consistently above pre-pandemic levels after rising on a trend basis since the cash rate began its upward climb.


 

“Businesses are now forced to direct more of their cash towards loan repayments and at the same time continue to grapple with unavoidable running costs that continue to rise, such as electricity, gas, fuel and insurance,” it said.


 

“In some cases, this is resulting in insufficient cash to pay all suppliers each month. It tends to be the smaller, non-essential suppliers who are reporting trade payment defaults.”


CreditorWatch chief executive Patrick Coghlan said the RBA’s attempts to curb inflation with interest rate increases were hitting businesses hard as consumers curtailed spending.


“Consumer demand is one of the key drivers of the economy and that is coming to a grinding halt as cost-of-living pressures bite,” he said.


“Costs of rents, electricity and fuel are all still very high despite the RBA’s best attempts to drive down inflation. Mortgage holders are suffering from increased loan repayments as well.”


The drop in the average value of invoices and the increase in B2B payment defaults gave a very clear picture of what businesses are going through at the moment, he said, adding that the drop in order values meant revenues and margins were also being squeezed through inflation.


“That is causing an increase in the number of businesses that are unable to pay their invoices to suppliers – and that is a real worry because those defaults greatly increase the chance that a business will not survive into the future,” he said.


“All the data is pointing to another challenging Christmas trading period so it is prudent for businesses to follow up on outstanding debts before then.”


External administrations also continue to rise with an 81 per cent year-on-year increase to October.


CreditorWatch chief economist Anneke Thompson said the increase in interest rates was impacting smaller businesses the most.


“SMEs are more susceptible to changes in demand than bigger businesses and, on the personal side, many owners will have rising home-loan repayments to service, which may involve them having to remove more money from their businesses and reduce orders from suppliers where possible as a result,” said Ms Thompson.


CreditorWatch predicted the business failure rate would significantly increase from the current 4.21 per cent up to 5.78 per cent over the next 12 months.


“This is in part because we are coming off a period where there has been an unusually low rate of business failures, but also the steep decline in consumer spending on discretionary items, which will impact many marginal smaller businesses,” the credit agency said.


“The ATO is also pursuing unpaid tax with more vigour, and there are many businesses that still owe significant amounts of GST following the end of COVID-19 payment ‘holidays’.”


.


 


 


 


Miranda Brownlee
16 November 2023
accountantsdaily.com.au




28th-December-2023

Liability limited by a scheme approved under Professional Standards Legislation